Chief Justice of Pakistan (CJP) Mian Saqib Nisar on Thursday said that the Supreme Court's directives barring the deduction of taxes imposed on the top-up of prepaid cards has not expired and that it will continue to hold until the court delivers a second order in the case, DawnNewsTV reported.
On June 11, the apex court had restrained the Federal Board of Revenue (FBR) and cellphone service providers from deducting withholding tax and other charges on mobile phone top-up cards till further orders.
Days later, FBR officials, in accordance with the court's orders, had said that they will not charge any tax or charges on mobile phone top-up cards for a period of 15 days.
With that 15-day period having expired, the SC weighed in today during a hearing on a separate case regarding the soaring prices of petroleum products.
"It was said that the decision to suspend tax deduction on mobile balance was for a limited time period and that the practice would resume following the expiry of two weeks," remarked the chief justice in the presence of the attorney general and several other members of the federation.
"The taxes on mobile balance cannot be deducted until the court's next orders," Justice Nisar declared. "The decision to suspend tax collection on mobile cards will hold until then."
Breakdown of deductions made to Rs100 calling card
The FBR, via an illustration, had earlier explained to the SC that every time a consumer loads a Rs100 mobile card, 12.5pc of the total amount gets deducted as adjustable withholding tax, while 10pc of the whole goes to the telecom company as service charges.
With the telecom company taking its cut, the 19.5pc sales tax also kicks in. However, it is applied only to the telecom company's 10pc rather than the entire Rs100 card.
At this point, the consumer is left with Rs76.94 — of which the government charges 19.5pc sales tax (Rs 15) to the consumer for making calls and sending SMS.
In the end, as per the FBR calculation, the net amount left with the consumer for his actual consumption on a Rs100 charge is Rs61.93.