The Ministry of Finance and Revenue has reported that a total of PKR 84.249 billion was collected as income tax under Section 236 of the Income Tax Ordinance, 2001, by telephone service providers across Pakistan from July 2024 to March 2025.

According to official documents, the entire amount has been duly deposited into the national exchequer in line with Rule 43 of the Income Tax Rules, 2002, which requires that any tax collected must be submitted within seven days after the close of each week. The Ministry confirmed there is no material variance between the tax collected and the amount deposited, indicating improved transparency and procedural compliance.

Tax Compliance Amid Structural Challenges

Section 236 of the Income Tax Ordinance pertains to advance tax collection on telephone and internet usage. With a subscriber base of 196 million, telecom companies play a significant role in mobilizing national revenue through indirect taxation.

While the overall tax collection process has remained consistent, varying only in terms of adjustments to tax rates over time, the absence of a robust mechanism for accessing subscriber-level data posed a major issue in ensuring accurate withholding and reporting. To address this, the FBR, through PRAL initiated a data exchange program with Cellular Mobile Operators for sharing details of tax collected and paid by each subscriber. This initiative enables the exchange of subscriber-specific tax data, improving the accuracy of withholding statements and enhancing transparency.

A secure File Transfer Protocol (FTP) system has been deployed to facilitate the monthly and quarterly exchange of data between the FBR Headquarters and telecom operators. This integrated digital infrastructure ensures that tax collection data can be monitored in real time.

Tax on Telecom Services: Weekly Monitoring and Enforcement in Place

The FBR’s Large Taxpayer Office (LTO) in Islamabad is conducting ongoing weekly monitoring of the data submissions and reconciliations. Regular reconciliation exercises are carried out to compare the revenue declared by operators with the tax collected and deposited.

Where discrepancies are identified, such as short withholding or delays in tax submission, the FBR initiates recovery proceedings under Section 161 of the Income Tax Ordinance, 2001, to ensure compliance and recover dues.

With the telecom sector continuing to expand and playing a critical role in Pakistan’s digital economy, its contributions to the tax base are increasingly vital. The Rs. 84.2 billion collected during the first nine months of FY2024-25 reflects the sector’s substantial role in public finance mobilization.

Experts suggest that further digitization, consistent policy enforcement, and better collaboration between regulators and telecom companies could unlock even higher revenues while ensuring fairness, traceability, and efficiency in the tax ecosystem.