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Advance Witholding Tax on Mobile Phone Use

What’s at Stake

Advance withholding tax imposed upon users of cellular mobile networks under the Income Tax Ordinance, 2001 imposes a heavy burden upon the average citizen. This is especially so given the difficult economic circumstances faced by a majority of the population during the time of a global pandemic caused by Covid19. Although a withholding tax of 12.5 percent is collected as advance tax from all users of cellular services, this tax is imposed regardless of the user’s income tax liability. Meaning that while a person may be earning a non-taxable income, he or she, being a non-filler would not be able to claim back the amount paid as withholding tax. The withholding tax imposed as advance tax under the Income Tax Ordinance, 2001 is in addition to General Sales Tax and Federal Excise Duty that users are obliged to pay under various Provincial and Capital Territory laws respectively.

Current Status

PILAP has written to the Ministry of Information Technology and the Finance Division advocating the following recommendations:

 

  1. Initiation of a scheme by the Federal Government whereby individuals and families who fall within the non-taxable income bracket are either exempt from advance tax on mobile use or given a concession in this regard;
  2. Adoption of similar schemes by the Provincial Governments and the Federal Capital;
  • Incorporation of the above scheme into the Ehsaas program to screen deserving individuals and families.

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