ISLAMABAD: Cellular companies’ consumers are only charged tax once at the time of payment for a prepaid card, the Ministry of Finance told the National Assembly on Thursday.

The ministry submitted a written response to a question from PPP MNA Shazia Marri, who believed that cellular companies’ subscribers are charged twice, first when they recharge their accounts and again when making calls or subscribing to packages using the same money they recharged in the initial transaction.

But the ministry said that subscribers do not pay taxes twice, not when recharging their balance or when making calls or activating packages as envisaged by the question. The ministry said tax is only charged once on the basis of the card amount.

The message a user receives at the end of a call is a breakdown of already paid taxes in accordance with the minutes of the call, the ministry said, adding that this is an effort by phone companies to be more transparent.

The ministry gave a breakdown of taxes on mobile phones, such as the phone bill, taxes and provincial sales tax. The ministry explained that since provincial sales tax is not applicable in Islamabad Capital Territory, federal excise duty is charged on the amount to ensure price equalisation.

Income tax charges is adjustable against a person’s annual tax liability.

Standing committees in the National Assembly and Senate have taken up the matter of consumers being charged twice, at the time of recharging their accounts and while making calls, in the past.

Members of these committees also believed that taxes collected when a consumer reloads their balance are not deposited in government accounts.

The government had responded that it had not developed a mechanism to ascertain if cellular companies deposited taxes collected from consumers into government accounts.

Published in Dawn, January 10th, 2020