FBR might assess possible in-appropriation in withholding and deposit of taxes by cell Cos

KARACHI: The disparity between the revenues of telecom companies particularly the cellular service providers and deposit of withholding tax has compelled the Federal Board of Revenue (FBR) to consider assessment of the records of telecom companies, it has been reliably learnt.
The number of cellular subscribers and the sales revenues of mobile phone companies thereof, the deposits of advance tax and general sales tax withheld on behalf of FBR have hinted some sort of in appropriation.
It may be mentioned here that all telecom companies including mobile phone companies withhold 10 percent advance income tax and 19.5 percent general sales tax on behalf of FBR, which is then transferred to the tax authorities.
For the year 2010-11, telecom sector transferred Rs27.566 billion withheld income tax while their sales revenues stood at Rs362.9 35 billion. Advance income tax is collected at a rate of 10 percent. The deposit for general sales tax (GST) was Rs52.6 billion, which is collected at a rate of 19.5 percent.
The cellular density has reached 121.6 million as on October 31, 2012. The total revenues of the telecom sector Rs262.76 billion.
It has also come to the observation of FBR, that there is no record of prepaid cellular airtime cards available for the users and thus such users are unable to claim adjustment against their tax liabilities or claim refunds.
The cellular users having postpaid connections are provided with the detailed bills, but the number of postpaid connection users is less than the prepaid connection users.
FBR is also planning to ascertain through investigations that the refund claims against advance income tax on telecom usage are genuine.
Thus an impression is growing in the minds of FBR officials that there might be some in appropriation in the withholding of taxes and their deposit to the FBR.

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