Daily Times

KARACHI: The telecom consumers of Pakistan paid almost Rs 19 billion to government in terms of General Sales Tax (GST) and Withholding Taxes (WHT) during first half (July-December 2016) of Fiscal Year 2016-17 (FY17), revealed the Economic Survey on Thursday.

At present, telecom consumers are charged 19.5 percent in form of GST and 14 percent in form of WHT while 16 percent GST and 10 percent WHT are charged in other sectors.

Meanwhile, being a significant source of revenue generation for the national exchequer, telecom sector contributed estimated Rs 53.76 billion to the national exchequer in terms of taxes, regulatory fees, initial and annual license fees, activation tax, and other charges during the first two quarters of the FY17.

Telecom sector is one of the highest tax paying sectors of Pakistan, as on every mobile recharge, consumers have to pay 14 percent of their charged amount in taxes. Telecom companies have demanded of the government to rationalize the telecom tax structure presenting five proposals to the government which include , eliminate WHT, rationalize Federal Excise Duty (FED)/ GST, Grant of industrial status to telecom sector by Federal Board of Revenue (FBR), Eliminate advance Income Tax on auction price of 4G spectrum and Eliminate SIM issuance and IMEI taxes.

According to breakup, telecom sector deposited Rs 34.96 billion to Pakistan Telecommunication Authority (PTA)’s account which comprise of all its receipts including initial and annual license fees, annual radio frequency spectrum fee, annual spectrum administrative fee, USF and R&D fund contributions, APC for USF, numbering charges, license application fee, etc. while Rs 18.35 billion contributed to national kitty by telecom companies was GST collected from telecom subscribers and Rs 0.45 billion has been paid to the government in terms of WHT and other custom duties by the telecom sector.

The Economic Survey (2016-2017) said that telecom sector has shown positive growth during the first two quarters of FY17. Total teledensity reached 72.36 percent at the end of March, 2017 compared to 70.81 percent at the end of last fiscal year. The prime driver of increase of teledensity is the growth in cellular mobile subscribers.

Revenues from telecom sector reached an estimated Rs 234.9 billion during the first two quarters of FY17. The commercial launch of 3G and4G LTE services has opened new opportunities for revenue generation for the mobile operators. Availability of 3G and 4G services has enabled development of new applications and data base services, and people of Pakistan are quickly adapting to these new technologies and services, added the Economic Survey.

In terms of overall investment in the telecom sector, the momentum that was started in FY 2012-13 for the up-gradation of telecom networks for 3G and 4G LTE services has continued. Telecom operators have invested a significant amount of $ 287.6 million during July to December, 2016. The main driver behind this investment is the cellular mobile sector which has invested $262 million during the first two quarters of FY17, stated the Economic Survey.