Punjab takes U-turn to tax mobile internet users

LAHORE: The Punjab government is again going to tax the data usage by the mobile phone users which it revoked earlier through a cabinet decision and also later approved by the provincial assembly during the last budget session held in June 2015.
In this regard, a notification is expected today (Friday) through which all the cellular mobile operators (CMOs) will be bound to pay 19.5 per cent tax on data usage by their customers.As per the new notification, the government is going to exempt the DSL (fixed or wired line) broadband connections and data usage for educational purposes, software exports, educational institutions and student packages.
Punjab Revenue Authority (PRA) Chairman Dr Raheel Siddique said a new notification would be issued on Friday. However, he did not share who will be able to get exemption. Earlier, he had told The News that the notification would be revoked as par the cabinet decision.
Talking to The News, a Punjab Finance Department spokesperson said the notification would be issued once the PRA prepared it. “The tax on data usage is PRA tax so it will prepare the document while the Finance Department will only issue the notification,” he added.
The Punjab government on May 28 had imposed 19.5 per cent tax on data usage by internet users. However, when the CMOs raised the issue with the government, mentioning that the move would negatively affect the plans on digitisation of the province, the government through a cabinet decision on June 12 revoked the tax.
Finance Minister Dr Ayesha Ghaus Pasha also announced the tax withdrawal in her budget speech on the floor of the House. However, no new notification was issued by the Finance Department.
Meanwhile, the CMOs kept asking the Punjab government to issue the notification of tax withdrawal so that they would get clarity in order to file their monthly return of GST on services to the PRA.
Contrary to this, the provincial government in a surprising move in its new planned notification has waved taxes on DSL (fixed or wired line) broadband connections to dodge the masses as subscribers of these services are mere 1.4 million. The majority of DSL subscribers are already using internet packages of less than Rs 1,500; hence they were already exempted from the earlier tax.
An official of a CMO said the industry had not received any notification or SRO from the Punjab government for removal or withdrawal of taxes on mobile internet or data services since the announcement made by Dr Ayesha.
The provincial minister announced on the floor of the House that the SRO would be taken back but the PML-N government was taking another U-turn for short-term goal of revenue generation at the expense of long-term socioeconomic benefits, he added.
The investors planning to work with the Punjab IT Board will also be affected by the move. Moreover, the tax will be an additional burden on the largest subscribers’ base residing in Punjab which includes 3G/4G users and mobile internet users with total share of more than 54 percent in the country’s overall subscribers’ base.
Sources in the Finance Department said the government had given a second thought after the cabinet decision which led to reintroduction of the tax. They said the government wasn’t ready to miss any opportunity of tax collection, ignoring the fact that the CMOs had heavily invested in the country by purchasing 3G/4G licences almost a year ago by paying more than one billion US dollars.
The CMOs have also planned $10 billion investment for network expansion to expand the 3G/4G network coverage which mainly benefits the Punjab which has 56 percent of the total population of Pakistan. However, imposition of tax on data usage will definitely compel them to revisit their plans.