ISLAMABAD: The government has proposed the industrial status for telecom sector, reduced withholding tax rates from 12.5 percent to 10 percent for tax year 2022, and eight percent for onward for telephone user on account of mobile telephone and prepaid internet or telephone cards, reduced rate of federal excise duty on telecommunication from 17 percent to 16 percent, and three percent reduced rate of withholding tax on telecommunication services in the Finance Bill 2021-22.
According to the salient features of budget 2021-22, Customs Act 1969 relief measures proposed the inclusion of telecommunication services in definition of industrial undertaking.
According to the notes on Clauses Customs Act, 1969 (Iv of 1969) seeks to include "Telecommunication Companies operating under the license of PTA" in definition of industrial undertaking.
It further seeks to reduce withholding tax rates from 12.5 percent to 10 percent for tax year 2022 and eight percent for onward for telephone user on account of mobile telephone and prepaid internet or telephone cards.
The bill proposed to provide exemption from the withholding tax provisions to payments received by the National Telecommunication Corporation for rendering services.
Further, the rate of federal excise duty on telecommunication is proposed to be reduced from 17 percent to 16 percent.
Further the reduced rate of withholding tax of three percent on oilfield services, warehousing services, logistic services, collateral management services and telecommunication services is proposed.
However, in order to reap reasonable revenue from this sector, federal excise on mobile phone calls exceeding three minutes @ Re1 per call, SMS message @ Re0.1 per SMS, and internet data usage @ Rs5 per GB is being proposed.
This will result into mild taxation of a broad spectrum of population.
Tax exemptions and concessions for Roshan digital accounts and implementation of electric vehicles and mobile phone policy implemented vide Tax Laws (Amendment) Ordinance, 2021 dated 11.02.2021 made part of bill.
Copyright Business Recorder, 2021