Govt Announces a Huge Increase in Tax on Balance Recharge

The government has increased the tax on mobile recharge and consumers will be charged 15 percent withholding tax on each recharge. According to sources from within the Ministry of Finance, an additional withholding tax of Rs. 4.2 is imposed on recharge of every card costing Rs. 100. The telecom companies have announced to levy additional tax on balance recharge and now on recharge of balance Rs. 100 the consumers will get a balance of Rs. 86.9. In this regard, text messages are being sent to consumers by various telecom companies informing them about the tax hike. The government had earlier proposed an increase of 5 percent in the withholding tax (WHT) on telecom services and the standard rate of 17 percent sales tax on the import of computers and accessories in the mini-budget. After the passage from the parliament, the finance supplementary bill was later signed by the President into an act of the parliament, which has come into effect. The government had brought down the WHT rate from 12.5 percent to 10 percent in the budget for 2021-22 and committed that it would be further brought down to 8 percent in budget 2022-23. However, the government reversed its decision to raise revenue, with a five-percentage-point hike in advance tax on the telecom sector. WHT was earlier collected at a rate of 10 percent from all telecom users, regardless of their taxable obligations. The majority of the country’s population has non-taxable incomes, these individuals are required to pay WHT, which they will never be able to recover. It should be recalled that the Ministry of Information Technology and Telecommunication had opposed the move to increase taxes on the telecom sector.