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Taxes on Telecom Services to Remain Unchanged

Finance Bill (2011-2012) has not proposed any changes in the existing tax rate on telecom services, told us sources who are directly aware of the situation.

Though there were hints available for the imposition of 20 paisa FED on each SMS, which now seems won’t be applied, according to the information that we are getting from government officials.

This means that General Sales Tax, Federal Excide Duty and activation tax will remain un-changed for telecom services, in the country.

On other hands, cellular industry had proposed to rationalize the taxes on telecom services, while telecom subscribers pay highest rate of tax amongst all sectors, locally and regionally.

Sources said that Federal Bureau of Revenue has not proposed any amendment in the First Schedule of the Federal Excise Act 2005 and Sales Tax Act 1990 for change in the rate of the FED on telecom services. The rate of the tax on the telecom sector would remain unchanged during next fiscal 2011-2012.

According to the draft of the Finance Bill (2011-2012), Sixth Schedule of the Sales Tax Act has been proposed to be amended to withdraw exemptions, but there is no specific proposal relating to the cellular companies or telecom sector.

Moreover, there is no procedural or legal change in the Sales Tax Act 1990 or Federal Excise Act 2005 for the telecom sector.

Under the Finance Bill 2009, Federal Excise Duty was proposed on short message service (SMS) @ 20 paisa per SMS message by amendment in Table II of First Schedule to the Federal Excise Act, 2005. The proposal was later withdrawn through amendment in the Finance Bill 2009.

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