Non-filers will receive only Rs10 on Rs100 mobile top-ups under new tax

The Federal Board of Revenue (FBR) has decided to impose a hefty 90% withholding tax on mobile phone top-ups for more than 570,000 non-filers.

A recent Income Tax General Order (IGTO) issued a list of over 570,000 non-filers. These individuals will pay a 90% instead of 2.5% additional withholding tax until they submit their income tax returns.

An automated system will deduct the 90% tax from any top-up made by a non-filer, prepaid or postpaid. For example, a Rs100 top-up would result in only Rs10 being credited to the phone balance, with the remaining Rs90 going to the tax body.

The initiative came after telecos and FBR agreed to block SIMS of non-filers and hinted at implementing a Plan B, which entailed an additional 2.5% withholding tax if non-filer SIMs remained active beyond May 15.

The new policy ensures that even if non-filers avoid SIM card blockage by not filing their returns, they will still face a penalty if they use another SIM for balance top-ups.

Data identifying non-filers has already been shared with the Pakistan Telecommunication Authority (PTA) and telecom companies. 

A few days are left for the telecom operators to block the SIMs of more than 570,000 non-filers.

As of now, over 11,500 SIM cards belonging to non-filers have been blocked and warning messages have been sent to 15,000 defaulters about their SIM deactivation.

According to sources, one telecom company has challenged the IGTO in court and has not yet blocked any non-filer SIMs.

The remaining three companies have complied with the instructions of FBR and submitted their report. The tax authority has also requested the details of the total number of SIMs blocked so far.

The FBR has threatened legal action against any telecom companies that fail to block SIMs by the May 15 deadline.

In early May, the revenue agency identified over 2.4 million individuals who should be paying taxes but were missing from their records.

The FBR selected over 0.5 million individuals from the pool of 2.4 million unregistered taxpayers, SIM card deactivation who earned a taxable income but failed to file their tax returns for 2023.