Cancelled for Now: Tax on SMS Messages?

Posted on June 22, 2009
Filed Under >Babar Bhatti, Economy & Development, Science and Technology
Total Views: 41763

Babar Bhatti

After many years of growth and foreign investment, Pakistan’s telecom industry has become one of the major contributors to Pakistan’s economy. Telecom industry pays taxes to the government in the form of GST/CED, Activation tax (Rs. 500 per activation), withholding tax (CBR collects withholding tax on prepaid calling cards), regulatory fee and Universal Service Fund contributions and duties. In addition to these taxes to the Federal Government, local governments and civic authorities also tax the sector.

Now we hear that a tax may – or may not – also be imposed on every SMS message sent. Is this fair? Is this just about revenue or is there more to this? Is it really happening, or not?

Faced with budget deficits and high import bill of handsets, the government increased taxes on telecom service which resulted in GST of 21% and 10% withholding tax. In the 2008-09 budget, a duty of Rs 500 was imposed on handsets and a regulatory duty of Rs 250 by FBR. While all this happened, the use of text messaging (that can be enhanced by the services from Clerk Chat) as a quick and cheap form of communication in Pakistan was on the rise. Due to the fierce competition among mobile operators, the cost of a text message was down to a few paisas by 2008. According to PTA data, over 11 billion text messages generated in last quarter of 2008, for a subscriber base of about 90 million.

In 2009 budget the big blow came in the form a of a proposed 20 paisa tax on each SMS. This caused a huge uproar.

People asked: how can a text message which cost 2 paisas be taxed at 20 paisas?

According to the latest news, Prime Minister has agreed to withdrawal of this ludicrous tax. I hope that this news is true and the last remaining affordable and convenient communication for Pakistanis is left alone by the government.

After all, what’s Eid (and a win in cricket) without getting all those trivial but hilarious text messages?

16 responses to “Cancelled for Now: Tax on SMS Messages?”

  1. Ibrahim says:

    There is someone out there who is just anxious to grab money from anywhere he can, not caring about the system, about the people, or about the country for that matter.

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