Taxes have been restored on the mobile top-ups by SC to enhance the Federal Board of Revenue (FBR) in meeting the targeted collection. Mobile top-ups are Prepaid cards that were exempted from taxes on June 2018. Wednesday, the Supreme Court (SC) of Pakistan made a decision that this restoration of taxes will help FBR collect the targeted amount for the ongoing fiscal year.
Taxes Restored to help FBR reach to the Target Collection Level
FBR has been struggling to reach the PKR 4390 billion annual tax collection targets in the fiscal year and the tax exemption on mobile cards made it impossible. In June 2018, the Supreme Court of Pakistan has suspended the taxes on the top-up of Prepaid cards and the FBR tax collection has adversely affected. Since the suspension of the mobile phone card taxes, the withholding taxes have dropped by an amount of PKR 35 billion from July to March. During this fiscal year, FBR had faced a shortfall of around PKR 4.5 billion every month only because of the suspension of these taxes.
Moreover, according to the officials this tax suspension on mobile phone cards had cost them a loss in the revenue of around PKR 155 billion. This is both at the federal and provincial level during the ongoing fiscal year.
However, after these ruthless estimates, the Supreme Court has finally restored the taxes on Wednesday on mobile phone cards. It is announced by the Supreme Court of Pakistan that the provider of cellular services will charge taxes on mobile phone cards. According to officials, it is still uncertain that the restoration will start from the previous dates or not. This will help FBR to generate more revenues.
During these nine months of fiscal year 2018-19 from July to March, revenue collection was PKR 2.186 trillion that was below the targeted collection of PKR 2.488 trillion. This created a shortfall of PKR 303 billion. But the tax collection of the mobile phone cards was one of many other reasons of the shortfall.
Another reason was relief given to the salaried class results in a massive shortfall in income taxes of PKR 40.5 billion. Whereas, the shortfall that occurred from the contract development budget was PKR 28.9 billion at both provincial and federal levels. However, officials stated that Supreme Court decision to restore taxes on mobile phone cards will help FBR raise the revenue for good.