Thursday, July 5, 2012

Cellular Operators evade GST through hidden sale

Cellular Operators evade GST through hidden saleCollectively, five cellular operators in Pakistan are collecting some Rs. 42 billion per month in the form monthly billing and pre-paid card balance on average that becomes Rs. 504 billion for the year 2010-11. The revenue includes prepaid as well as postpaid billing.
Whereas, it has been observed that all cellular operators are hiding their revenues and evading GST in a massive manner.
In 2003-04, then cellular operators earned Rs. 27. 84 million and paid to the government in terms of GST Rs. 12.1 million which amounts to 44 percent of the total amount collected. It is to be noted that tax rate was 19.5% and the total cellular subscriber base was mere 5 million.
The Transparency International Pakistan’s (TIP) advisor Syed Adil Gilani has noted that cellular operators have posted their revenue for the year 2010-11 as Rs. 262.76 billion on PTA’s website. He identifies a shortfall of Rs. 241.24 billion in revenue collection thus a GST evasion of Rs. 47 billion when the cellular subscriber base is approximately 119 million and the GST rate is 19.5%.
According to DAWN, TIP has written a letter to the Chairman of Pakistan Telecommunication Authority and asked to probe into the matter and check the reporting procedure of cellular operators.
Hiding sales and evading GST is a normal practice in Pakistani telecommunication sector. Recently, FBR had seized the accounts of Mobilink and PTA for not paying the outstanding tax amounts.

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