Sindh govt imposes 19.5% sales tax on internet

Tax is applicable from July 1, 2019

KARACHI: Internet and broadband services, which are considered basic necessities and the backbone of developed economies worldwide, are going to become expensive in Sindh as the provincial government has slapped sales tax on them.

"The Sindh Revenue Board has withdrawn the exemption of sales tax on services from internet and/or broadband services with effect from July 1, 2019," said a notification of the Sindh Revenue Board (SRB).

The notice has informed service providers that from July 1, all internet and broadband customers, irrespective of their speed or charges, will pay sales tax at the statutory rate of 19.5%.

K-P increases tax on people earning over Rs20,000

"Internet and broadband services of up to 2 mbps speed and 4 mbps speed, the charges for which did not exceed Rs1,500 per month and Rs2,500 per month respectively, were exempt from sales tax, the said exemption has been withdrawn with effect from July 1, 2019," added the notice.

The notice pointed out that in 2011, the internet and broadband services were given exemption from sales tax while in 2013 and 2016, notifications were issued for the imposition of partial sales tax on digital services.

When the SRB was contacted, an official on condition of anonymity said sales tax on internet and broadband services had already been imposed in Punjab, K-P and Balochistan at the rate of 19.5% and the same rate was applied in Sindh.

It is pertinent to mention that exemption from federal excise duty (FED) on internet and broadband services has also been withdrawn by the federal government with effect from July 1, 2019.

"It is common for governments to impose high taxes on things that they consider harmful for citizens like cigarettes and alcoholic drinks. Similarly, we continue to protect citizens from harmful effects of internet," said ICT expert Parvez Iftikhar, who has served as the Universal Service Fund (USF) CEO and country head of Siemens Telecom, Pakistan.

Tax levied on ride-hailing services, online shopping in Sindh

"Although studies from all over the globe are confirming that internet adoption and usage helps in economic growth, financial inclusion, gender balance, healthcare, innovation and competitiveness but obviously all these are not considered good enough benefits," he said.

Published in The Express Tribune, July 26^th, 2019.

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