In the Budget for 2010-11 announcement no tax cut for Telecom Industry but earlier, there had been confusion in the industry about leveling of GST may have reduced taxes on Telecom sector from 19.5 percent to 17 percent.
In the Budget 2009-2010:
Reduction of Federal Excise Duty on telecommunication services.
Reduction of Federal Excise Duty on telecommunication services from 21% to 19 % is aimed at reducing the cost of the service.
Enforced through amendment in Table II First Schedule to the Federal Excise Act, 2005, effective from the 1st July, 2009.
After confirming from FRB officials, Telecom experts and senior journalists, we can now safely say that there has been no change for any taxes on Telecom industry in Budget for 2010-11.
The reason: 19.5 percent tax that telecom customers pay on services is FED or Federal Excise Duty and not GST. Leveling of GST at 17 percent will not impact any taxing on telephony services.
Mr. Abdul Rehman, Director at FBR has confirmed us that taxation on telecom services come under FED, hence telecom customers will keep paying same amount of taxes as they were paying before budget. Mr. Zahid Khawaja, telecom reporter at NNI (News Network International) also confirmed us the same.
Another confusion is that on the prepaid card recharge currently the amount deduction is Rs. 16 of Rs. 100 Card, which is again a withholding tax not GST so that will also remain the same.
We apologize for misunderstanding and misrepresenting the facts earlier. Though this happened due to a fact that media had been terming taxes on telecom as GST. Here and Here are examples where mis-represented the information.
For Reference to Budget 2009-2010 : Click Here
