Govt reduced 1% FED on telecom services.


The government has reduced the rate of FED on telecommunication services from 19.5% to 18.5% and has withdrawn FED from the provinces where the GST on telecom services has been levied. The rate of the withholding tax on telecom services has been reduced from 15% to 14%.

Last week Ceos has been proposed  cut in sales tax, withholding tax and abolishing of SIM activation tax on cellular services. It has proposed for a centralised system of tax returns to avoid double taxation, The Express Tribune has learned.

The sales tax or federal excise duty (FED) on cellular services should be reduced by 2.5% to 17%, cellular mobile operators (CMOs) proposed in their budget recommendations already submitted to the finance ministry, according to sources familiar with the matter.

CMOs argue that the GST and FED rate should be rationalised in line with other sectors of the economy – the FED on telecom sector is applied at the rate of 19.5% compared with 17% on other sectors.

The CMOs also proposed that the SIM activation tax should be abolished — the government currently telecom lobby also argued that more than 80% of the country’s 136 million cellular subscribers were below the threshold of taxable income. The advance income tax or withholding tax should, therefore, be reduced from the current 15% to a maximum of 10%, they recommended.