SC suspends tax deduction on pre-paid mobile scratch cards

The Supreme Court of Pakistan ordered a suspension in deduction of taxes on pre-paid scratch cards here on Monday.

Last month, Chief justice of Pakistan Mian Saqib Nisar had also taken notice of the high levy charged on the pre-paid scratch cards in the country as he ordered federal and provincial governments and the FBR to respond to why so many taxes were being deducted on pre-paid scratch cards.

The Chief Justice ordered the suspension in deduction of taxes while heading a three-judge bench hearing a suo motu case regarding an increase in taxes on pre-paid scratch cards at the top court’s Lahore Registry.

It was observed that there should be a difference between those who pay their taxes and the evaders.

The CJP gave authorities two days to implement court orders.

“Taxes should be taken from users whose mobile phone usage is above the set limit,” Justice Nisar remarked during the hearing.

He further directed authorities to draft a comprehensive policy regarding deduction of taxes on mobile phone usage.

“Service providers and Federal Bureau of Revenue (FBR) charge taxes on pre-paid scratch cards and are looting people,” the bench remarked.

“How are taxes being charged from those who do not fall in the tax network?” the bench asked the FBR chairman.

The bench further stated, “It is illegal that Rs64.38 are charged as taxes on a Rs100 pre-paid scratch card.”

To this, Justice Ijaz Ul Ahsan asked the FBR chairman, how can a person who does not fall under the tax net be charged?

The FBR chief explained that collection of service charges from mobile phone users is the policy of telecom companies.

According to statistics revealed by the Pakistan Telecommunication Authority in January this year, the number of mobile phone users stands at 144 million as compared to 142.5 million in October 2017.