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ISLAMABAD: Under the directives of the Supreme Court, the tax authorities have suspended all taxes collected by mobile phone companies with effect from June 14.

All amounts charged at cellular networks either for the internet or mobile telephony will be reflected in the balance of the customers from midnight between Wednesday and Thursday.

However, the court directives are applicable only for two weeks as the Federal Board Revenue (FBR) will present its report on the revenue impact of the decision after that period.

The decision has been announced by a three-member bench of the apex court headed by Chief Justice Mian Saqib Nisar and comprising Justice Umar Ata Bandial and Justice Ijazul Ahsan, in a human rights case.

The order said that after hearing all sides the court was of the view that withholding tax, sales tax and service charges have not been validly and legally imposed.

It said that the tax authorities as well as the mobile companies will file a detailed report about withholding and sales taxes levied on non-taxable individuals — the poor people who were earning below the taxable income.

The court also said that the companies were not entitled to collect service charges from their customers, and the decision in this regard will be made in the final order.

Currently, when a customer charges an amount either for mobile telephony, which includes voice service and SMS, or for the internet services 12.5 per cent withholding tax is levied by the FBR. At the same time 10pc service charge is deducted by the mobile company from that amount.

Besides, 19.5pc General Sales Tax is levied on every call and on the usage of internet service.

The mobile companies have uploaded the following message at their websites: ‘Dear Customer, pursuant to Order of the august Supreme Court, – (company) suspends deducting all previously applicable taxes as well as Service Fees on every prepaid customer on purchase and usage of services including recharge of customer account with immediate effect throughout Pakistan. However, this will not have effect on AJK & GB’.

The SC order is not applicable to Azad Jammu and Kashmir and Gilgit-Baltistan because certain FBR taxes have not been levied in those areas.

Published in Dawn, June 14th, 2018