Despite several promises, Information technology industry has not received any changes in the recent finance bill given for the year 2013-14. Infact it has been observed that this sector has not even been touched at any stage. The taxes are same as of previous year and no improvements have been made. The telecom sector again remains one of those sectors which have high taxes as compared to others in the country. Still there is no hope that there would be any decreases in rates of taxes, the telecom and IT industry has developed certain uncertainties over the 19.5 percent that is allocated for FED and further 10 percent for WHT on telecom services. Despite a number of reservations, some of the industry officials are very much happy by the budget because they think that it is good if there are not any extra kind of price hikes in the tax rates on the telecom and IT services and other related equipment. This also means that the order given for application of GST at 17 percent will only be applicable on the telecom and IT sector.
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It is worth mentioning here that most of the telecom and IT industry consumers have to pay about 7 percent of charges for various types of services. These charges are not associated with the 29.5 percent taxes which all the consumers pay additionally. Before the budget was given there were several rumors about broad band services. All together a telecom consumer has to pay about Rs 34.55 for every Rs 100 in terms of taxes and other types of service charges. The most prevalent one was that these services will be taxed this year but the good news is that these will remain same as the previous year and un-taxed as well. Government of Pakistan has just now imposed some taxes on all types of mobile phones and the latest smartphones because government is looking forward to recover about USD 1.8 billion alone from the telecom sector. This step has been taken to meet up the government deficits.
Although government has declared increase in GST for different sectors from about 16% to about 17% and telecom and IT sector is also included in this release. Until now, telecom and IT sector have become the biggest consumer utility services providers because they have to pay about Rs 39.828 billion in terms of taxes that are related to the telephonic services. Still the consumer has to pay @20 paisa for one SMS message according to the Federal Excise Act 2005 previously but this decision was then later withdrawn by the Finance Bill 2009.
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IT sector has been generating a huge amount of revenue for the government and the remittances earned through this sector are highly desirable. This sector was tax free previously and yet in the current budget no new taxes have been imposed on the consumers. Government should implement some more taxes on this sector so that more revenue can be generated through tax collections.
