A mysterious five percent service charge on about 80 million pre-paid customers was imposed, the PTA and cellular companies have confirmed. Before the budget 2008-09, the pre-paid customers were charged 10 percent withholding tax on every new load, which was deducted in advance. The customers were also paying 15 percent sales tax on every call.
However, the present government increased the sales tax from 15 percent to 21 percent for mobile users by declaring the mobile phone a luxury item. Along with this the government also levied Rs 750 import tax on the sale of every handset even if it was worth Rs 1000. In the present situation the pre-paid mobile users are supposed to pay Rs 29 in taxes for every Rs 100 used.
According to a senior PTA official the active pre-paid users, who according to experts are merely 35 to 40 million, load a total of Rs 1 billion per day on an average. "A five per cent service charge means that Rs 50 million will be collected per day by all the companies, which amount to Rs 1.5 billion per month."
Senior PTA officials said a major reason presented by the cellular operators is that they have done this due to recent inflation trends and raises in electricity charges while this could have been tackled by increasing call charges (tariff) to some extent.
An official said that levying a huge duty of five percent in the head of 'service charges' means nothing except irregularity, as it has not been authorised by the parliament in the budget.
He revealed that the laid down procedure was not followed and written permissions were not taken before making this move. Simply verbal discussions and subsequent verbal permissions of some high-ups were used as an excuse for imposition of this charge on pre-paid cellular customers.
According to him no documentation was done until last Monday when we asked about it. He said that no meetings within the PTA were arranged to discuss whether cellular operators should be allowed this high raise in tariff and to investigate whether pleas taken by a cellular operator to allow this duty were sufficient enough for PTA to allow imposition of a five percent service charge.
The charges were secretly imposed on September 25 without any notice to the customers. However, when questioned about the charge forwarded, two companies gave ads in newspapers mentioning its imposition and answers were given only after the ads were published.
The PTA officials remained reluctant to reply on the issue for about a week. However, the PTA spokesperson responded on Monday saying the mobile operators approached PTA saying that due to overall inflationary trends because of exorbitant increase in the fuel charges, recent upward revision in electricity tariffs and downward slide of the rupee vis-a-vis the US dollar and other major currencies, operational expenses (Opex) of cellular mobile operators have increased considerably.
The cellular mobile operators requested the Authority to allow levy of 5 percent service charge on prepaid scratch cards, easy load. It may also be noted that tariffs of post-paid subscribers are higher as compared to prepaid. Therefore, 5 percent service charge has been imposed on prepaid service. On the question whether they had taken proper permission from the PTA, they said: "Yes, the due course of implementation as per regulatory requirements was followed."
Asked whether they have shifted the whole burden of present inflationary trend to the customers who were already paying increased taxes, they replied: "As is the case in every sector, the tax incidence falls on the consumer. However, the companies, faced by the rising cost of business including increase in the fuel charges and recent upward revision in the electricity tariffs, have only increased five percent."
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