Advance income tax on mobile phone users to reduce gradually

Following the federal cabinet's nod to grant the telecom sector the status of an "industry", the advance income tax imposed on mobile phone users will fall gradually.

According to a tweet from the Ministry of IT and Telecommunication, the federal cabinet's nod came after the the recommendations of the ministry.

The ministry said there would be a gradual reduction of taxes imposed on the telecom sector and mobile phone users.

"This is a major achievement that will directly benefit not only mobile phone users but will also help spread the spirit of digital Pakistan (connectivity) to remote areas of the country," Federal Minister for Information Technology and Telecommunication Syed Amin ul Haque said as he addressed a press conference on Thursday.

From the next financial year (2021-22), advance income tax on mobile phone users will be reduced from 12.5% to 10% and in the financial year 2022-23, it will go further down to 8%, Haque said.

Similarly, the federal excise duty (FED) on telecommunication services has been reduced from 17% to 16%, the minister noted.

Haque said the government is planning on reducing 6% excise duty along with tax reduction on various services, according to The News. "Rs250 charges on sim purchase have been withdrawn, and this will be beneficial for the public."

Information and Communication Technology (ICT) export remittances — including export of telecommunication, computer, and information services — surged to $958 million at a growth rate of 40% during July-December in the current fiscal year of 2020-21, in comparison to $684 million during the same period last year, he added.