Internet services from sales tax in Punjab

STAFF REPORT LHR: The Punjab government has excluded the internet services used by the public, educational institutions, corporate sector and the software exporting firms from the sales tax.

According to a notification issued here, the Finance Department making amendments in the Punjab Sales Tax on Service Act 2012, exempted the internet services whether dialup or broadband including email, data communication network services (DCNS) and value added data services from the sales tax with immediate effect.

Furthermore, all charges payable on the international leased lines or bandwidth services used by the software exporting firms registered with the Pakistan Software Export Board will be exempted. The data and internet service providers licensed by the PTA would also be excluded from the tax, the notification added.

According to telecom industry experts, FDI is expected to slow down in telecom sector after introduction of heavy taxation by the provincial government of Punjab which constitutes 60 percent of the overall subscription of mobile phone companies including 60 percent of the mobile internet users out of 18 million.

They claimed that the overall revenues of the mobile phone companies have dropped significantly due to deduction of heavy taxes constituting half of their earnings (50 percent) at present which are unbearable for them. They said that unfavorable business environment of telecom sector is leading to the failure of next spectrum action which is expected to generate $500 million next year.

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