ISLAMABAD: In compliance with the Supreme Court’s orders, cellular companies have stopped deducting service charges for their prepaid cards.

Now around 50 per cent of the amount which was deducted in the past would be included in the balance and the customers will receive a top-up of Rs88.9, instead of Rs76.94, on a scratch card of Rs100.

“In the past, cellular companies used to deduct around 22.5pc in different heads such as service charges and administrative charges from the prepaid cards. However, from Monday only 12.5pc withholding tax is being deducted. That amount would be deposited in the exchequer,” Pakistan Tele­communication Authority (PTA) spokesperson Khur­ram Mehran told Dawn.

He said that the apex court’s decision had been implemented by the cellular companies. “However, the decision is relevant to only prepaid cards,” he said.

Last year, then chief justice of Pakistan Mian Saqib Nisar had taken suo motu notice on public complaints that an unreasonable and high amount of tax/other charges were being deducted from the topping up balance through ‘easy load’ and calling cards, besides taxing the calls.

Observing that the matter involved public interest, the court had asked whether deduction of Rs40 on every scratch card of Rs100 was exploitation. The court had suspended the deduction and during one of the hearings, it was told that the state had suffered a loss of about Rs90 billion since the issuance of the suspension order.

In April this year, the apex court restored deduction of withholding tax and sales tax on pre-paid cellular scratch cards by vacating the earlier suspension order. However, the court stated that the telecom companies were not allowed to impose any service/maintenance charge.

Before suspension, on each calling card of Rs100, withholding tax (income tax) of 12.5pc was deducted under Section 236 of the Income Tax Ordinance, 2001, by the Federal Board of Revenue, whereas 17pc excise duty was charged from users in Islamabad Capital Territory. The provinces were charging 19.5pc sales tax on services from the users. In addition, cellular companies were deducting 10pc for the services rendered by them.

Published in Dawn, July 16th, 2019