The Central Board of Revenue (CBR) is examining a proposal to bring four telecommunication services in the tax net. These are voice mail services, voice paging services and services pertaining to data transmission by the Data Network Service Providers (DNSPs) and the internet service providers (ISPs). Sources told Business Recorder on Thursday that the tax authorities may consider levying central excise duty (CED) in value-added tax (VAT) mode on these telecommunication related-services.
The proposal has been drafted to bring more services in VAT-Mode.
At present, the provinces have to promulgate ordinances to levy sales tax on services, but the CBR is empowered to levy CED in VAT mode without consulting provinces. In case, the government agrees with this, the CBR proposal for necessary provision will be introduced in Finance Bill 2005-06.
Last year, the CBR levied CED in VAT mode on advertisement through cable TV network and closed circuit television.
Sources said the CBR had issued a clarification that the Internet Service Providers and the Data Network Service Providers are not liable to central excise duty (CED) under SRO. 333(I)/2002. In consultation with the Pakistan Telecommunication Authority (PTA), the CBR had clarified that since the Internet Service Providers and the Data Network Service Providers are authorised to use data communication only, they are no VSAT service providers as such, rather they are data operators. Hence the users of VSAT terminals who are using VSAT for the purpose of extending internet or data communication service only, (such as ISPs and DNOPs) are not liable to central excise duty under SRO.333(I)/2002. On the other hand, the CBR has the authority to levy CED in VAT mode on any service despite issuance of clarification, sources added.
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