According to Ministry of Finance sources, every recharge of a card costing Rs. 100 is subject to an additional withholding tax of Rs. 4.2. Telecom firms have declared that they will pay an extra tax on balance recharges, and users will now receive a balance of Rs. 86.9 for a recharge of Rs. 100.

In this context, many telecom firms are sending text messages to customers warning them of the tax increase.

In the mini-budget, the government proposed a 5% rise in withholding tax (WHT) on telecom services and a standard rate of 17 percent sales tax on the import of computers and peripherals. Following its passing through parliament, the President signed the financial supplementary bill into an act of parliament, which is now in effect.

In the budget for 2021-22, the government reduced the WHT rate from 12.5 percent to 10 percent, with the promise that it will be further reduced to 8% in the budget for 2022-23.

The government, on the other hand, reversed its revenue-raising choice by raising the advance tax on the telecom sector by five percentage points. WHT was previously levied at a 10% rate on all telecom customers, regardless of their taxable obligations.

Because the bulk of the country’s population has non-taxable income, they must pay WHT, which they will never be able to recoup. It should be noted that the Ministry of Information Technology and Telecommunications had previously opposed the idea to raise telecom taxes.