The Sindh government withdrew an internet sales tax exemption that was being offered to users who had accounts with values under Rs. 2,500 or had internet speeds below 4Mbps.
With this decision, all DSL, FTTH, 3G, 4G, cable and any other internet services will be charged at 19.5% higher rates in the province as of July 1, 2019.
Previously, there was a sales tax exemption for Internet users, primarily to support students and those with slower speeds.
An official notice sent to all providers said that all Internet and broadband customers, regardless of their speed or charges, will pay sales tax at the statutory rate of 19.5%. He said the taxes would apply from July 1, 2019.
According to officials, the tax on internet sales and broadband services had already been imposed in Punjab, Khyber Pakhtunkhwa, and Baluchistan at a rate of 19.5% and the same rate was applied in Sindh.
Shortly after the Sindh provincial government’s decision to impose sales tax on internet services was official, the Federal Minister for Information Technology and Telecommunications, Dr. Khalid Maqbool Siddiqui, condemned the decision.
In deciding on the victimization of youth, the Federal Minister for Informatics said that “youth is the largest segment of our society and this Sind government decision will affect our youth, especially the students.”
He asked the Sindh government to withdraw its decision to impose a 19.5% sales tax on internet and broadband services.
Ironically, the federal government itself withdrew the EDF exemption from internet services and external satellite broadband service in the 2019-20 Finance Bill.
Telecommunications services provided in the Islamabad Capital Territory are subject to the FED which was exempt prior to July 1, 2019. In addition, bandwidth services were also exempt from the FED.