Sindh gov decides to slap 16% tax on 65 telephony services

by Yasir Ameen

The Sindh government has decided to slap 16 percent general sales tax (GST) on 65 different telecom services including Short Message Service (SMS) to be effective from July 1, 2011.

Sources said that the Sindh Sales Tax on Services Act 2011 has imposed 16 percent GST on various telecommunication services including SMS and messaging services while demolishing 19.5 percent FED.

The provincial government of Sindh intends to impose 16 percent sales tax on SMS and internet/email/data/SMS/MMS service on cellular mobile networks.

The services provided by mobile phone companies have been indirectly brought into the GST net by the provincial government of Sindh. Sales tax on services would be collected by the province on the basis of ‘Origin of Service’.

The proposal to impose GST on SMS services was made part of the federal budget (2010-2011) last year by the Federal Board of Revenue (FBR), but the proposal was rejected by the Parliamentarians and Finance Act 2010 did not incorporated this proposal due to strong resistance by the  Parliamentarians.

The reaction of the general public and the policy makers in Sindh would be clear after implementation of the Sindh Sales Tax on Services Act 2011 on telecommunication services from new finaicla year.

Sindh Sales Tax on Services Act  2011 has issued detailed list of telecom services liable to sales tax from July1, 2011. The telecommunication services subjected to 16 percent sales tax under Sindh Sales Tax on Services Bill 2011 included SMS, Multimedia message service (MMS), telephone services, fixed line voice telephone service, wireless telephone services, video telephone, payphone cards, prepaid calling cards, voice mail services, bandwidth services,  paging services, voice paging services, truck radio services, radio paging services, vehicle tracking services, burglar alarm services, digital signature services, telex services, fax services, internet/email/data/SMS/MMS service on WLL networks, internet/email/data/SMS/MMS service on cellular mobile networks and data communication networks.