The incumbent Chief Justice of Pakistan Mr. Mian Saqib Nisar has taken Suo Moto notice today about the higher amount of taxes implemented by the telecommunication companies on the customers.

CJP particularly took notice of the 40% tax, which is applied on the mobile cards. He was amazed to know the reasons for which the telecommunication companies were deducing higher amount of taxes from people when the latter buy cards.

At the moment, all the customers are charged flat 12.5% withholding tax upon loading the card. Along with that, when the card is loaded, another 10% amount is also deducted as service charges by the cellular companies. These charges are considered by Telcos as separate and different charges as a matter of fact. For example, if one company considers it as administrative fee, the other would call it as service charge, while third company would consider it as maintenance fee.

Moreover, after the early deduction of 22% amount of the total, there is 19.5% GST applied on every transaction, which includes calls, voice, data and/or package. This means that the customer is going to pay a total of 40% taxes on mobile cards. Furthermore, such high taxes are applied across the board, even for those customers who are not under the tax net, i.e. even when they are earning the income less than that of taxable income.

In today’s notice, CJP asked FBR as well as the local telecommunication company representatives about their position on this issue. The Attorney General of Pakistan will also be assisting the court on this matter in the future hearings in Supreme Court of Pakistan.

It must be remembered that telecommunication sector is the highly taxed sector in the country right now. The government has become heavily reliant on these companies for tax collection, which has rather made a negative impact on the growth of this sector. The telecom sector started booming in 2005, which went on till 2009. After that, the tax collection from this industry became quite stagnant.

On the other hand, the telecom industry has continuously asked for the rationalization in the telecom taxes, but no results have been gained in this regard so far. So, it needs to be seen how the Suo Moto notice will be providing any tax relief to the general public in Pakistan.