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Supreme Court suspends tax deduction on prepay mobile phone recharge

LAHORE: The Supreme Court of Pakistan on Monday restrained the federal authorities from deducting taxes from mobile phone recharge through easy load or scratch cards till further orders. 

This restraining order came during the hearing of a case pertaining to unreasonable and high tax deduction from the topping up of cell phone balance.

Headed by Chief Justice Mian Saqib Nisar a bench gave the authorities concerned two days to ensure implementation of its order.

It further directed that a comprehensive policy regarding tax on mobile phone cards should be charted out.

Justice Nisar questioned how a person who doesn’t fall within tax net is made to pay taxes on mobile phone top-up. Tax should be levied from a person whose cell phone use exceeds the fixed limit, he added.

Rs38.64 is deduced on account of different taxes from every recharge of Rs100, which is unreasonable and illegal, the judges observed.

At the previous hearing, Attorney General Ashtar Ausaf informed the judges that mobile phone companies charge 19.5 per cent sales tax, 10 per cent service charges and 12.5 per cent withholding tax (WHT).

At this, Justice Nisar asked how withholding tax can be applied to mobile phone cards. It is unfair to charge withholding tax from consumers who are not entitled to pay taxes, he held.

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