Punjab Government proposes tax on internet services

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LAHORE: Punjab government in its budget for next financial years has officially decided to impose 5 percent tax on internet services, A report by Propakistani.pk revealed on Saturday.

 While Dr. Ayesha Bukhsh, Finance Minister for Punjab, didn’t mention this new tax in her budget speech, we can confirm that all sorts of online services will be taxed in Punjab at a flat sales tax rate of 19.5%.

Another 14% tax is already being deducted for Internet services across Pakistan. This will take the entire taxes on Internet to around 35 percent. That is roughly one third of the total price.

Officials of mobile phone companies confirmed with ProPakistani about the new tax and said that this measure goes against the government’s digital Pakistan ambitions.

New taxes will be applicable from July 1st, 2017. It must be noted here that Punjab had previously imposed the same tax in 2014 but had withdrawn it after facing backlash. However Students in Punjab, who use Internet below Rs. 1,500 per month, are exempted from this newly imposed sales tax.

It won’t be out of place to mention here that Pakistan added 40 million new Internet users during past three years. It is feared that this new tax will put caps on such exponential growth rates and will badly impact the country’s economy.

This was a major development because province of Punjab had more than half of Pakistan’s population and internet penetration was gaining strength with the introduction of 3G/4G services.

Most broadband companies were in the process of upgrading subscribers to higher speeds and many people were choosing better packages on their own. However, in November 2015, the Punjab government issued the notification withdrawing 19.5% tax on mobile internet on pressure of media.

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