Govt restores tax on mobile phone calls

Finance Minister Shaukat Tarin on Friday announced the withdrawal of a host of inflationary taxation proposals but reintroduced tax on mobile phone calls as a measure to recoup Rs15 billion revenue losses due to withdrawal of increase in sales tax rates on food items.

Winding up the budget debate in the National Assembly, Tarin also announced to reverse taxes on food items after the government faced criticism from the public for imposing taxes on dairy products, poultry feed and wheat products in the middle of double-digit inflation.

There would be no tax on internet usage and SMS but 75 paisa per telephone call exceeding five minutes duration would be collected, said Tarin. In the Finance Bill, the government had proposed tax of Rs1 per call of more than three minutes, Rs5 per 1 gigabyte of internet usage and 10 paisa on each SMS.

Subsequently, Tarin announced the withdrawal of all these taxes but he brought back the phone call tax, which was expected to generate at least Rs15 billion in the next fiscal year, starting from July. Tarin said that the visually-impaired mobile phone users would be exempted from taxes on handsets.

During his address in the National Assembly, Tarin also announced the reduction and withdrawal of those taxes that could have massively fuelled food inflation.

He said the sales tax on milk products would remain unchanged at 10%. The tax on poultry products and cattle feed was being reduced from 17% to 10%. He further clarified that no tax was imposed on wheat and wheat by-products.

He said that the sales tax on gold and silver would be 1% and 3% but it will be 17% on value addition in gold. As an incentive to encourage the retailers to register with the FBR’s Point of Sale, Tarin announced to further reduce the tax on textile products for retailers from 12% to 10%.

The minister said that the tax incentive announced earlier for up to 850cc cars would now be available for cars up to 1,000cc. He added that taxes on the medical bills and provident funds of government employees had been withdrawn as well.

He further announced that taxes initially imposed on IT and e-commerce platforms had been rationalised. The unregistered persons doing business would now pay 2% sales tax as against the budget proposal of 17%, he added.

The government had also rationalised the proposal of charging capital gain on over Rs5 million from sale of property under normal tax regime and had instead decided to reduce the rate to 20%. Similarly, the income tax rate on Real Estate Investment Trusts had also been reduced from 25% to 15%, he added.

Tarin said that the next fiscal year’s budget would give hope to every segment of society. He said that 4 million to 6 million people would directly benefit from various government schemes and Rs45 billion incentives had also been offered to the industrial sector.

Talking about the electronic voting system, the finance minister said that Rs5 billion had been allocated for the electronic electoral process for “transparent elections in the country”.

He said that harassment by the Federal Board of Revenue (FBR) was a problem due to which taxpayers did not file their returns. The government planned to set up a third-party system with a legal structure. He said that a person would only be arrested when he would refuse to pay taxes.

The government had withdrawn the wrong policy measures with the same haste it had introduced in the budget, said Ahsan Iqbal, former planning minister, while speaking on the floor of the House.
Iqbal said that PTI’s budget was full of contradictions, indicating that the government “prepared the budget in a non-serious manner”.

Iqbal challenged Prime Minister Imran Khan to release the Debt Commission Inquiry report, if there was any truth in allegation that the last government usurped loans.

In three years, the PTI government did not release the debt report because it added Rs13 trillion into public debt, which was even more than what the PML-N had added in five years, said the former planning minister.
Iqbal said that the PTI government has promulgated 50 presidential ordinances and also imposed Rs700 billion taxes through ordinances.