LAHORE: The Punjab government has withdrawn the 19.5 per cent general sales tax (GST) imposed on mobile internet including 3G/4G on May 28, 2015.

After facing five and half months ‘battle’ between the Punjab Revenue Authority (PRA) and the telecom operators, the provincial government on November 25 issued a notification stating that “telecom services have been excluded from taxes including internet services whether dial-up or broadband including email services, data communication network services (DCNS), and value-added data services.”

It further states that the taxes have also been withdrawn on international leased lines and bandwidth services used by software exports companies registered with Pakistan Software Export Board and data and internet service providers licensed by PTCL.

Punjab Finance Minister Dr Ayesha Ghous Pasha in her budget speech on July 12, 2015 first announced to withdraw mobile internet tax whereas Chief Minister Shahbaz Sharif also made similar announcement which was not implemented by the PRA.

Mobile phone companies were waiting for new notification on the chief minister’s assurance.

The provincial government had been under immense pressure to withdraw the taxes from cellular phone companies having invested billions of dollars in past one and a half years on the launch of 3G and 4G services.

The introduction of taxes restricted the consumption of mobile internet by the customers because Punjab has the highest 56 per cent of 3G/4G users in the country.

This taxation badly hampered the roll out efforts by the cellular companies as they would not be able to invest in upgradation of their services, as a whole, it had a negative impact on the whole ecosystem.

The telecom operators took plea before the Punjab government that the internet services were already heavily taxed by the federal government and there was no justification for provincial tax.

A source in the PRA told Dawn on Friday that after giving this exemption to the telecom operators by the chief minister, the authority had requested to the government to revise its collection target by Rs5 billion to Rs67bn for this fiscal.

The source said the PRA intended to collect sales tax between June 12 and Nov 25, 2015 as per official requirement as it kept serving notices to the telecom industry for tax collection.

“It will now be a challenge for the PRA to collect the outstanding amount during the period,” he added.

Published in Dawn, November 28th, 2015