PTA clarifies tax breakup on cellular usage to angered consumers

The Pakistan Telecommunication Authority (PTA) has stepped up on Friday to clarify the charges being incurred by cellular consumers on the recharge, following the recent online debate alleging the Cellular Mobile Operator (CMO) companies of deducting excessive surcharges, ARY News reported.

In a press statement issued by the telecom authority, it has noted that CMOs are only charging 12.5 per cent Withholding Tax (WHT) on any amount of recharge in the prepaid services.

PTA further clarified that if someone loads Rs200 in their cellular account, the amount they shall receive after the deduction of 12.5 per cent WHT (or Rs22.222 in this case) will be Rs177.778.

The authority said that the debate on social media claimed that Rs152 were being received on the recharge of Rs200 which it denied as incorrect.

it is stated that Cellular Mobile Operators are deducting
only Withholding tax & General Sales Tax/Federal Excise Duty on the prepaid recharge/reload after restoration of taxes by the honorable Supreme Court of Pakistan from April 2019. pic.twitter.com/Z6i9cNYksi

— PTA (@PTAofficialpk) October 9, 2020

Moreover, the PTA statement further broke-up the tax schedule applied on the usage of the cellular network and stated that the General Sales Tax (GST) of 19.5 per cent is applied on the consumption of the remaining amount.

It said that as the consumer makes a call or sends an SMS or uses data, the amount of GST will be deducted then with original cost.

Using the same analogy of Rs200 recharge, the authority further explained that out of the remaining Rs177.778 each form of usage will incur a 19.5 per cent GST over the original cost.

It added that if a consumer subscribes to a package, the original amount of the package will surcharge an extra 19.5 per cent on account of GST. To explain, it noted that if an actual price of any package is set at Rs167, the consumer must have a total of Rs199.56 to avail it which is price plus GST (Rs167 + Rs32.56 = Rs199.56)

“Due to lack of clarity on the deduction of GST in addition to WHT,” the statement read, “mobile subscribers are assuming that CMOs are charging well above applicable taxes…”.

Furthermore, the notification said PTA has fixed a ceiling on call setup charges at Rs0.15 per call and that it was done after the restoration of taxes by the honourable Supreme Court of Pakistan from April 2019.

“PTA is vigilant about the rates/tariffs being charged by CMOs & action will be initiated on any reported incidence of charging above the published tariffs & applicable taxes in accordance with the law,” the statement concluded.