A classic example of how citizens are hoodwinked!

PTA “clarification” reveals prepaid mobile users being charged as much as they think but only differently

By: Mahmood Sadiq      Published: 12:00 AM, 17 Jan, 2020
A classic example of how citizens are hoodwinked!

LAHORE

In an effort to contradict claims about tax on prepaid mobile phone users, the Pakistan Telecommunication Authority Friday issued a “clarification”, which in fact testified that the claims made on social media were actually true.

The press release was drafted in a way as to make people think they are not being charged as much as they believe, but it only required a bit of common sense to read between the lines.

However, the press release sheds some light on how and when the consumers are charged and on whose asking they are charged so highly.

It also helped understand that it is not the service providers who are ripping off consumers but our beloved government, in fact.

It transpires that we are not taxed in one go, as most of us think; we are taxed twice: once when we recharge balance and again after we consume it.

Mobile users, according to PTA, are paying a total of 32% tax on prepaid balance recharge.

In other words, the subscribers loading Rs100 balance end up having value for only 68% of their money. And, this is what was being claimed on social media, with slight variation in figures.

Here is the verbatim PTA press release:

With reference to taxes applied on the recharge / reload of prepaid balance, it is stated that Cellular Mobile Operators (CMOs) are deducting only Withholding tax and General Sales Tax / Federal Excise Duty on the pre-paid recharge / reload after restoration of taxes by the honorable Supreme Court of Pakistan from April 2019.

On the recharge of Rs100, the balance provided to the user is Rs88.889 (and not Rs76 as reported on the social media) after deduction of Rs11.111 against withholding tax @ 12.5%.

GST @19.5% is applied on per call, SMS, and data usage basis. When a user consumes its remaining balance of Rs88.889, a total of Rs14.505 as GST is charged. Due to the lack of clarity on the deduction of GST in addition to WHT, mobile subscribers are assuming that CMOs are charging well above applicable taxes, which is not correct.

Furthermore, PTA has fixed a ceiling on call setup charges @ Rs0.15 per call. PTA is vigilant about the rates / tariffs being charged by CMOs and action will be initiated on any reported incidence of charging above the published tariffs and applicable taxes in accordance with the law.

Did you notice the way PTA tried to fool us? I believe, you did!