SC asks FBR, provincial govts to justify tax on mobile top-ups

ISLAMABAD: Chief Justice of Pakistan (CJP) Mian Saqib Nisar on Tuesday said that the Federal Board of Revenue (FBR) and provincial governments should tell the court that under which law tax is being deducted on consumers’ mobile top-ups.

He said this during a proceeding of Supreme Court’s (SC) suo motu notice of the “unreasonable” deductions made from consumers’ mobile top-ups on the pretext of withholding taxes and other charges.

During the proceedings, the attorney general informed the court that mobile companies deduct 19.5 per cent as sales tax, 10 per cent as service charges and 12.5 per cent as withholding tax on mobile top-up cards.

He further informed the court that these taxes were not applicable on services used by the government and diplomats.

“Why is withholding tax charged on mobile top-ups? Is withholding tax not charged in order to penalise those who otherwise do not pay applicable taxes?” CJP Nisar asked. “Is double taxing not illegal?” the chief justice separately inquired.

“How are they charging withholding tax from 140 million mobile service subscribers who are not eligible to pay taxes?” he continued, at which Justice Umar Ata Bandial remarked that it seemed like “an unlawful way to coax money out of people’s hands.”

“How are those people who are not eligible to pay taxes supposed to get their deducted withholding tax refunded?” the chief justice wondered.

“Also, tell us the law under which sales tax is charged from people,” the chief justice asked, to which a lawyer present in court pointed out that people living in Islamabad are required to pay 17 per cent as sales tax while those in the provinces are paying 19 per cent.

“The FBR and the provincial governments should tell the court under which law this provincial sales tax is applicable,” the chief justice said.

The bench subsequently asked for a chart that can show the taxes paid by mobile phone users in countries all over the world.

The federal and provincial government and the FBR were also ordered to submit written replies to the court’s questions within a week.