Punjab Govt Withdraws Internet Tax, Notification Issued

Punjab Revenue Authority (PRA) has issued a notification for the withdrawal of 19.5% additional taxes on Internet services, but has left the telecom sector confused again by not mentioning when it is effective.

“Despite the issuance of notification, the main issue still to be resolved that the Punjab government did not mention any dates in the notification that from which date the internet tax is annulled,” industry sources said. Usually, validity or withdrawal of any regulatory orders are considered effective from the issuances dates of the notifications, however, in this case, tentative attitude of the Punjab authorities on the issue made the situation confused as the Punjab chief minister already had announced withdrawal of the tax after his meeting with the PRA officials on July 29, 2015 while the PRA issued an SRO imposing 19.5% tax on mobile internet and data service, including 3G and 4G on May 28.

After the verbal announcement of Punjab chief minister, Punjab Finance Minister Dr Ayesha Ghaus announced withdrawal of taxes on Internet during her budget speech in Punjab Assembly on June 12, however despite several verbal announcements the notification was not issued by PRA on time. Thus, telecom companies are still confused about the exact date concerning that what date should be considered for this withdrawal, added sources. Mobilink and Telenor had announced to deduct the tax, while other operators were waiting for a clarification from the government.

According to sources, the Punjab government had planned to collect almost Rs 3.5 billion to 4 billion revenue through this tax, but after severe pressure coming from telecom sector, government was compelled to withdraw that tax. Sources said that since CM Punjab had announced the withdrawal in May 2015, telecom companies didn’t deduct any taxes from consumer and did not pay to government by their own. However, keeping in view the vagueness on the issue, it could be said that the government of Punjab may advise telecom companies to pay the taxes in future for the period before the notification was issued, sources shard their apprehensions.

On Friday, Punjab Information Technology Board (PITB) Chairman Dr Umar Saif and IT secretary of the government of Punjab said, “Punjab has (finally) officially notified the withdrawal of 19.5% Internet tax, the first province to withdraw this tax. Hope others follow according to the notification.” According to the notification issued by PRA, Punjab governor has directed the authorities concerned to exclude as many services from the Punjab Sales Tax on Services Act, including sales tax Internet services whether dialup or broad band, e-mail services, data communication network services (DCNS) and value added data services.

Also, the international leased lines or bandwidth services used by software exporting firms registered with the Pakistan Software Export Board and data and Internet services providers licensed by the Pakistan Telecommunication Authority will be considered services tax free.