KARACHI: Fixed line phone users in the country will pay 10 percent additional amount on the account of withholding tax introduced by the government from this month.
According to the SRO amended in Finance Act 2008, all telephone subscribers have been subjected to a uniform rate of withholding tax of 10 percent on the bills that exceed Rs 1,000 per month.
“Withholding tax under section 236 of the First Schedule is collected on monthly telephone bills exceeding Rs 1,000 at different rates; the maximum rate of collection was Rs 300 per month,” it said. However, the tax is adjustable and the taxpayers can claim tax refunds at the time of income tax returns.
Analysts said that the number of subscribers whose monthly bills exceeds Rs 1,000 have increased manifold since April, when the leading telephony service decreased pulses duration from five to two minutes.
The bills of residential and commercial consumers have almost doubled since the Pakistan Telecommunication Limited (PTCL) has reduced pulse duration. The PTCL, later increase it by one-minute.
“The customers paying Rs 8,00 per month are now paying above Rs 1,600 for last few months and they will also pay additional 10 percent amount on the account t of withholding tax,” an analyst said.
He said the majority of the customers are reluctant to claim their taxes with the relevant department similarly as the majority of pre-paid cellular phone users do not do. He said the commercial and industrial users will face this additional burden.
There are around six operators of landline services in the country with 4.8 million subscribers since 2007. Experts of telecom industry told that users are shifting their consumption to mobile telephony from landline but they are still reliant on landline phone services for specific purposes.
According to the PTA financial report 2007, the growth pattern of fixed line subscribers has changed rapidly since 2005 when number of connections that has touched 5.2 million base, started declining and reached up to 4.8 million connections in 2007.
It said that demand of fixed line connections is also diminishing by 80 percent since 2005, as the pending connections were 375,235 in the country that decreased to 60,673 in 2007.
Besides, the fixed line density in the urban areas has also declined to 1.6 in 2007 from 2 in 2005. The density remained stagnant at 1.4 in the rural areas.
Analyst Farhan Rizvi of JS Capital Research mentioned the mobile phone operators are also expanding their network in rural areas of the country so they easily compete with the fixed line services because of their cheap rates. He said the hassle of bill payment and the time consumed for getting fixed line connection have shifted customers inclination toward mobile phone and wireless local loop services.