IT, telecom sectors ask govt to reduce tax burden, rationalise curbs on imports

ISLAMABAD: The telecom and IT sectors have asked the government to reduce the tax burden, rationalise restrictions on imports, retention of 100 percent for use of foreign exchange and tax exemption regime in the next budget 2023-24. The telecom and IT sector high-ups participated in a meeting held under Prime Minister Shehbaz Sharif on Tuesday in which the premier urged the authorities concerned to jack up the IT related exports up to $5 billion in the next financial year. The telecom industry presented its demands before the prime minister and asked for reduction in Advance Income Tax (AIT) from 15 percent to 8 percent in the next budget The industry sought an exemption for telecom operators from Section 113C, similar to banking, insurance and petroleum sectors.

They asked for simplification of tax collection mechanism under Section 147 ITO. The telecom sector sought exemptions in withholding tax and quarterly reconciliation as granted to banking and oil sectors. They asked for reduction in Customs Duty (CD) on raw material and local manufacturing of Optical Fiber Cable. The telecom operators proposed raw materials to be included in Fifth Schedule Part-III Customs Act, to reduce the CD to zero percent for enabling local manufacturing. The industry asked for removing the regulatory duty on imported equipment of the telecom sector and rationalise the customs duty at three percent for proposed telecom equipment.

It said the Alternate Dispute Resolution Council (ADRC) must be granted binding compliance for tax authorities, enable concurrent due process and appeal rights for taxpayers. The Offer of tax payment may not be condition precedent for ADRC proceedings, they demanded. They asked for reduction of FED/ GST on telecom services and to reduce FED from 19.5 percent to 16 percent as applicable before the Budget 2022. The single FED/ GST rates may be applied and laws may be implemented nationwide under harmonised GST. For the IT sector, they proposed for launching skills development with allocation of Rs2.9 billion for branding and marketing, Rs1 billion for Infrastructure Development, Rs0.7 bn for capacity development, Rs400 million for funds required, Rs5 billion for physical and online bootcamp, Rs1.5 billion for industry academia bridge, Rs400 million for training the trainer, Rs800 million for internship programme, Rs200 million for international events and exhibitions, Rs500 million for domestic events and meetups, Rs200 million for Media and Publications, Rs300 million for STPs and co-working space, Rs600 million for cloud infrastructure, Rs100 million for one window facilitation, Rs200 million for PSEB capacity development and Rs200 million for banking. It was proposed to allow 35 percent retention and usage of foreign exchange by IT exporters, simplification of 0.25 percent income tax regime, dividend paid by start-up/ IT companies to be given tax exemption, sales tax exemption on computers, laptops, five percent cash reward for IT/ ITES companies on export income as verified by SBP, benefits of STZA be included in the finance bill. The IT industry proposed 100 percent retention and use of foreign exchange. The industry has proposed tax exemption regime the FBR had agreed on simplification mechanism. The FBR has not agreed with the proposals whose estimated cost of Rs13 billion will result in tax reduction.