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Tarin demands cellular operators to raise SMS prices to get tax relief

LAHORE: The cellular phone operators are not willing to accept the government’s offer to increase their SMS rates in order to get relief in the GST and SIM activation charges.

The News has learnt that a meeting was held between CEOs of cellular companies and the adviser to the prime minister on finance Shaukat Tarin on Monday in which the adviser had linked the decline in GST and SIM activation to increase in SMS rates.

All operators rejected the offer except one that is not offering bundle SMS package to its customers. The only beneficiary of the government offer would be that single company, which was unable to continue bundle SMS packages due to network issues, the finance ministry revealed.

The SMS addicted youth would be the target of the government for generating revenue.

Currently, if a company offers unlimited SMS for Rs3 per day the government earns only 0.21 paisa tax from this package. Once the SMS rates would be increased the bundle SMS packages would automatically end. Thus the government will earn taxes on every SMS which ever be the rates.

On the other hand the share of SMS in total revenue generation is almost 8 per cent only while 92 per cent revenue is coming from voice services to the cellular companies. Thus the revenue of the company would also increased once the SMS rates would be reduced the people would increase voice services.

The telecom industry and the regulatory authority PTA have already proposed to the government to reduce SIM activation tax in the upcoming budget 2009-10 to attract more foreign investment in Pakistan in the telecom sector.

Sources in Federal Board of Revenue (FBR) said that a substantial reduction in SIM activation would be announced in budget but there is no proposal to reduce the general sales tax as this is the easiest way of collection GST for revenue generation.

The mobile phone operators are demanding of the policy makers to bring the level of tax on telecom industry at par with other sectors, including activation tax for its speedy growth in the country.

In the last year’s budget, the federal government had increased general sales tax (GST) to 16 per cent from 15 per cent, however, the telecom industry was the only industry which had been imposed a 21 per cent GST.

Source: The News

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