Telcos to Ask Govt For Reversal Of Withholding Tax On Cellular Services In New Budget

It has been revealed that telecom cellular firms will put pressure on the government to reverse the rise in withholding tax on telecom services, which has a huge impact on the operators of roughly Rs. 18 billion per year.

It is seen by the industry as harmful to the economy’s digitalization effort and as undermining the aim of a “Digital Pakistan.” Sources in the cellular industry told, once the new ministries of information technology and finance take office, full budget plans will be shared.

In the previous budget, the previous administration set a strategy for the telecom sector, which included lowering the withholding tax from 12.5 percent to 10 percent, with the goal of lowering it to 8% by July 1, 2022. However, in January 2022, the administration overturned its choices.

It has important effects for the telecom sector, according to sources, and the newly elected administration would be asked to decrease the withholding tax.

In Pakistan, only about 2.9 million persons, or one percent of the population, file income tax returns, out of a total population of 220 million. Despite the fact that the majority of the country’s population has non-taxable income, they are subjected to withholding tax, which they are unable to claim.

“To enable investment in the telecom sector, the next government should assure continuity in policies,” the official added.