You will have to start paying tax on mobile phone top-ups as the Supreme Court has rescinded its order restricting the Federal Board of Revenue and mobile companies from charging tax on mobile phone top-ups.
This means that if you spend Rs100 on mobile ‘credit’ then not all of it will be deposited as your balance. You will have to pay a certain percentage as tax to the government.
The verdict was announced on Wednesday by Chief Justice Asif Saeed Khosa. He remarked that the court will not interfere in matters of public revenue and tax collection.
On June 12, 2018 the top court had had barred network providers and the FBR from collecting service tax on pre-paid cards, saying it was exploitative and illegal.
Prior to the court orders, the consumers were charged 10% service tax, in addition to other taxes, such as withholding tax (5.5%) and sales tax (19%). On a Rs100 pre-paid card, only Rs64 are availed by the consumers.
The order was challenged by provincial governments. They argued that the issue of mobile phone taxes does not fall under the Supreme Court’s powers as defined in Article 184(3) of the Constitution.
The article states: “[…] the Supreme Court […] if it considers that a question of public importance with reference to the enforcement of any of the Fundamental Rights conferred by Chapter I of Part II is involved, has the power to make an order of the nature mentioned.”
The Punjab government told the court that it was unable to collect Rs80 billion of revenue because of the suspension of mobile phone taxes.