TAHIR AMIN

ISLAMABAD: The Federal Board of Revenue (FBR) has kicked off withholding income tax audit of cellular mobile companies in a bid to professionally examine, analyze and verify the veracity of income tax, revealed senior officials.

To start with, the final data uploaded by M/s Telenor Pakistan (Pvt) Limited has been picked up for withholding income tax audit of the same company, said the officials while briefing the Senate Standing Committee on Information Technology and Telecommunications, which met with Senator Shahi Syed in the chair Monday.

The audit will take around 8-10 weeks to reach a meaningful conclusion, the official said while briefing the committee on the progress made so far on mechanism/policy being devised by the FBR and Pakistan Telecommunication Authority (PTA) regarding collection of taxes, ie, GST and WHT from cellular operators.

The member FBR told the committee that software has now been developed to collect biweekly data of customers of telecomm companies. The companies were reluctant initially to share this data, terming huge customer base and confidentiality the reasons for reluctance but the matter has been resolved after involving PTA.

Presently, four mobile/cellular telephone companies - M/s Telenor Pakistan (Pvt) Limited, M/s Pakistan Mobile Communication Limited (Mobilink), M/s Telecom Mobile Ltd (Ufone) and Ms CM Pak Ltd (Zong) - are operating in Pakistan. As per requirements of the Income Tax Ordinance, 2001, the telcos are withholding income tax from millions of customers, and in the process, generating a massive volume of customers’ transactions on daily basis. Further, the telcos are also required to collect sales tax (in the case of provinces) under concerned provincial sales tax laws whereas Federal Excise Duty (in the case of Islamabad Capital Territory) is being collected under Federal Excise Act, 2005.

In order to professionally examine, analyze and verify the veracity of the income tax (withholding taxes), the FBR with the assistance of the Pakistan Revenue Automation (Pvt) Ltd (PRAL/IT Wing), has been able to develop a software utility portal (/electronic). All the four telcos are required to upload their monthly customer wise income tax (withholding tax) data, on the prescribed format. For this purpose, the PTA, the telecom regulator, also provided active support in exhorting the telcos to upload the requisite data on the electronic interface.

After extensive technical exchanges between telcos and Pakistan Revenue Automation (Pvt) Ltd (PRAL, IT Wing, FBR), three telecom companies - M/s Telenor Pakistan (Pvt) Limited, M/s Pakistan Mobile Communication Limited (Mobilink) and M/s Telecom Mobile Ltd (Ufone) - have uploaded their income tax (withholding tax) data for the months of July, August and September 2017, through the online interface as provided by Pakistan Revenue Automation (Pvt) Ltd (PRAL), whereas the fourth telco M/s CM Pak Ltd (Zong) is facing a number of technical issues in uploading the required data on the PRAL-utility portal which are in the process of being resolved by them.

To start with, the final data uploaded by M/s Telenor Pakistan (Pvt) Limited, has been picked up for withholding income tax audit of the same company. The concerned field officers have already visited the company twice to cross-check the data from the system used by the company. In view of massive volume of the number of transactions involved therein, the exercise of income tax (withholding taxes) is expected to be completed in 8-10 weeks.

The withholding income tax audit of other telcos would also be carried out after taking into account the outcome and inference drawn from the case of M/s Telenor Pakistan (Pvt) Limited, the FBR official added.

The parliamentary panel recommended for not deducting WHT on mobile cards of Rs100, as most of the poor people - not liable to tax net are using it.

The committee members also recommended for giving exemption from WHT to Fata and Gilgit-Baltistan. The committee observed that it is a matter of legislation and needs to be taken to the Parliament.

The FBR officials stated that in the budget proposals a certain limit may be proposed for deduction of WHT from the poor. He further stated that FBR collects around Rs1 billion per week and around Rs48 billion per annum as WHT from mobile consumers. However, committee members stated that a nominal number of people could only claim WHT due to complex tax system in the country.

Shahi Syed said that there are around 135 million mobile users and with an average Rs200 is being used by each, they account for Rs810 billion. In case of 10 percent service tax, the amount will be Rs81 billion. According to calculation, he further stated that FBR should collect Rs113 billion of taxes instead of Rs48 billion.

While briefing the committee on progress on implementation status of recommendations of the committee regarding increase in the pension of all the retired employees of PTCL, secretary IT and MD Pakistan Telecommunication Employees Trust (PTET) said that the matter of pensions is in the Islamabad High Court. The court has asked for accurate calculations as well as directed for depositing the money of pensions to the court. The matter will be resolved as per directions of court. The secretary ministry of IT&T also told the meeting that meetings of PTET and PTCL as well as the board have been conducted to implement finality of judgment of the Supreme Court.

Shahi Syed observed that PTET is an independent trust and it should resolve and facilitate the issues of retired employees of PTCL. He further said that PTCL transferred around Rs45 billion to PTET during the last five years and there is no issue of fund shortage. Further PTET is earning huge amount from buildings etc, therefore pensioners’ issue may be resolved on humanitarian basis.

The committee chairman rejected the notion that PTCL would default in case it pays the entire outstanding amount.

The MD PTET told the meeting that pensions are being disbursed and the only issue is about the 20 percent raise announced for civil servants in 2010.

The committee was further informed that annual pension increases to pensioners are approved by the Board of Trustees. From 1996 to 2010, the Board approved annual pension increases as notified by the government of Pakistan. In 2010, because of significant financial impact, the PTET board approved pension increase which was less than increase notified by the government of Pakistan. Thereafter, pensioners filed several writ petitions and after series of hearings, on 12 June 2015 the apex court decided the case in the interest of pensioners.

A review petition was filed on 13 July 2015 in Supreme Court against the judgment of June 12, 2015. On May 17, 2017, the apex court disposed of the review petitions in terms that PTCL/review petitioners may file applications u/s 12(2) of civil procedure code 1908 before the concerned courts, since certain areas were required to be addressed by high courts.

The committee was further informed that in accordance with the decision on review petition, applications have been filed before the Islamabad High Court and Peshawar High Court under section 12 (2) of Civil Procedure Code 1908 which are pending adjudication.

Several pensioners filed contempt petitions before High Courts and Supreme Court regarding pension increase cases. While hearing the contempt petitions regarding June 12 decision, the apex court on June 14, 2017 directed to submit compliance report within 60 days. After court vacations, on September 15, a compliance report had been submitted.

The case was fixed for hearing on November 1, 2017, when the same was adjourned. Next date is awaited, maintained in PTET brief.

The meeting was attended among others by Senators Syed Shibli Faraz, Taj Muhammad Afridi, Dr Ghous Muhammad Khan, secretary Ministry of Information Technology and Telecommunications and other senior officials.