Govt may review proposal

June 9, 2012

Mobile Bill Tax
Govt may review proposal
Finance Minister AMA Muhith has hinted at reversing a plan to impose 2 percent tax at source on mobile phone bills. Responding to a query on whether he would review the fact that the tax to be entirely borne by customers, he said, “It certainly needs consideration. Let’s see.”
Muhith was talking to journalists in an open discussion at Osmani Memorial Auditorium in the capital yesterday, a day after he had presented the budget for 2012-13 fiscal in parliament.
In the discussion, a journalist observed that the new tax would be a burden for the lower-income people, such as rickshaw pullers and farmers.
In his budget speech, the minister proposed the tax on the total bill for post-paid subscribers and on every recharging for pre-paid users.
The tax plan has spawned confusion among consumers and industry leaders.
The country’s around nine crore mobile users already pay 15 percent value added tax. If the new tax proposal is taken into account, they would have to pay 17 percent tax which might trouble the people of the lower income brackets, said industry insiders.
Tax to be deducted at source on mobile bills, as mentioned in budget documents, was misleading, said AF Nesaruddin, a chartered accountant and partner of Hoda Vasi Chowdhury & Co. Tax deducted at source is a way of collecting income tax and should not be mixed with consumption tax, he said.
“As for mobile bills, there is no element of income tax for users. Tax on mobile bills can be termed consumption tax or levy,” he said, “Most importantly, tax at source is adjustable against the total income tax liability, but consumption tax is not.”
Mentionable, the value added tax is a form of consumption tax.

-With The Daily Star input

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