Tax rate on the mobile phone, Internet users in 2022-2023

KARACHI: The Federal Board of Revenue (FBR) has issued an amended income tax law to notify tax rates for mobile phone and internet users in 2022-2023.

The FBR has issued an updated Income Tax Order 2001 to June 30, 2022 incorporating changes made by the Finance Act 2022.

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The Revenue Service collects these taxes under Section 236 of the Income Tax Order 2001.

Under this section, in the case of a telephone subscriber (other than a mobile telephone subscriber) whose monthly bill amount exceeds Rs 1,000, the tax rate shall be 10% of the amount of the excess bill.

Similarly, in the case of a subscriber to the Internet, a mobile telephone and a prepaid Internet or telephone card, the tax rate is 15% of the amount of the invoice or the selling price of the prepaid Internet card or prepaid telephone card or sale of units by any electronic medium or in any form whatsoever.

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Pursuant to Section 236: Telephone and Internet Users.- (1) An advance tax at the rates specified in Section V, Part IV, of the First Schedule shall be levied on the amount of –

a) a subscriber’s telephone bill;

(b) prepaid cards for telephones;

(c) sale of Units by any electronic medium or in any form whatsoever; and

(d) a subscriber’s Internet bill; and

(e) prepaid Internet cards.

(2) The person preparing the telephone or Internet bill shall charge the advance tax under subsection (1) in the manner in which telephone or Internet charges are billed.

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(3) A person issuing or selling prepaid cards for telephones or the Internet shall collect the advance tax under subsection (1) from purchasers at the time of issuing or selling the cards.

(3A) A person issuing or selling units by any electronic means or in any form shall collect withholding tax under subsection (1) from the purchaser at the time of issue of the sale of units.

(4) Withholding tax under this section shall not be levied from the government, a foreign diplomat, a diplomatic mission in Pakistan or a person who produces a certificate from the commissioner that his income in during the tax year is exempt from tax.

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