The Federal Board of Revenue (FBR) from January 16, 2022 increased the advance tax on a wide range of cellular services from 10 to 15 percent including telephone bills of subscribers; prepaid cards for telephones; sale of units through any electronic medium; internet bills of subscribers, and prepaid cards for internet.

A tax expert explained that the rate of advance tax on cellular services under section 236 of the Income Tax Ordinance has been increased from 10 percent to 15 percent through the Finance (Supplementary) Act, 2022.

The FBR has also issued income tax circular 12 of 2022 to explain the significant amendments made in the Income Tax Ordinance, 2001 through the Finance (Supplementary) Act, 2022.

Under section 236 (telephone and internet users), advance tax at the rates specified shall be collected on the amount of telephone bill of a subscriber; prepaid cards for telephones; sale of units through any electronic medium or whatever form; internet bill of a subscriber and prepaid cards for internet.

The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.

The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards. The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.

Advance tax under this section shall not be collected from government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax, section 236 of the Income Tax Ordinance added.

This report was first published in Business Recorder on Jan 28, 2022.