Mian Saqib Nisar Chief Justice, Supreme Court of Pakistan has instigated proceedings on its Suo Motu notice on mobile recharge card taxes on Tuesday, 08 May 2018. The CJP had taken serious notice on this issue due to heavy tax deductions on mobile recharge card.
Throughout the court minutes, Attorney General of Pakistan, Mr. Ashtar Ausaf Ali informed the Supreme Court that cellular companies deduct 19.5 percent as sales tax. Further break down of this tax specifies that 10 percent contained service charges while 12.5 percent tax is taken as WHT on mobile phone cards. He also informed the SC that these taxes are not pertinent to services that are used by Government and diplomats.
The Chief Justice of Pakistan asked the reasons for charging withholding tax as he said that it was for penalizing the users who otherwise do not pay taxes valid to them. He further accentuated that the double tax was prohibited.
He also wanted to know why withholding tax is charged by Government from 140 million mobile services subscribers who were not entitled to pay taxes. Justice Umar Ata Bandial gave his observations and said that it appears to be illegal money to coax money out of people’s hands.
Mian Saqib Nisar also considered over ways to refund telecom users who were not eligible to pay taxes but were charged withholding taxes. He further asked under which laws these taxes were charged. A lawyer present in the court informed the court that citizens of Islamabad are required to pay 17 percent sales tax while citizens of all the provinces have been paying 19 percent sales tax.
The Chief Justice also required that Federal Board of Revenue (FBR) and Provincial Governments issue a written reply to the Supreme Court that isolates the law under which this sales tax was being applied. He also asked them to inform the court how these taxes are paid in other countries.