ISLAMABAD  - The pre-paid mobile phone users were ripped off by Rs. 40 billion, when 14 percent withholding tax was automatically deducted from every card recharge they made last year.  
The Federal Board of Revenue received Rs.43 billion on account of withholding tax during 2014-15. Out of 120 million total users only 0.9 million deposited tax return claims and got back what they paid in advance.
The remaining amount of more than Rs.40 billion was automatically confiscated by the government at the end of the financial year. These revelations were made by Federal Board of Revenue in the Senate Standing Committee on IT on Monday.
The FBR officials informed that on every mobile card re-charge of Rs100, mobile phone companies deduct 14 percent withholding tax, while 19.5 is charged as federal excise duty in capital or as provincial tax in provinces.
Answering a question, the FBR officials clarified that the telecom companies and thousands of franchisers were charging the 14 percent advance tax from consumers on every recharge, but neither FBR nor Pakistan Telecommunication authority has human or technological expertise to check whether the huge advance tax collected from users was actually deposited in national exchequer or not. There is a possibility that instead of going to national kitty, this huge sum land in the pockets of mobile phone companies, chief withholding tax, FBR, told the committee.
This information was surprising for many members who were unable to understand that why the government was charging 14 percent withholding tax from all the users. This advance tax is also charged from users living on the verge of or below poverty line. According to estimates, around 70 percent of total population of the country is living on the verge of or below poverty line.
The committee members reprimanded the Ministry of IT for charging irrational taxes from the telecom sector.
PML-N lawmaker defended the move and stated that it is the duty of every citizen no matter illiterate or literate, poor or rich, to file returns and get back the withholding tax.
The members criticized the minister and termed the approach irrational as low income group is exempted from filing returns and any illiterate cannot file complicated tax return form.
If a user earns 15000 a month, he is not legally bound to file tax returns, but suppose if he wants to file the returns and suppose he is educated enough, still he needs a lawyer, meaning he will have to spend at least Rs. 5000 to get back around Rs.2000 he paid on account of withholding tax in one year, the members argued.
During the discussion, it was revealed that PTA has no mechanism to check the actual number of mobile phone users in the country and it solely relies on telcos for all the statistics.
The discussion turned ugly when Senators Rehman Malik and Osman Saifullah Khan asked pointed questions regarding the role of Ministry of IT in rationalizing taxes on mobile phone users and deteriorating state of information technology in the country, whereas the IT industry of neighbouring country, India, was clinching top slot in the world ranking in IT sector and was making billions of dollars.
Why India is on top, but we are nowhere in IT, we should admit at government level, facilitation is not there, Rehman Malik said.
What did you or your government (PPP) do when you were holding the portfolio, a government minister frowned back, immediately, instead of answering a simple question.
During the discussion, when the Minister for IT showed her helplessness and meagre resources, in response to every question,  Senator Osman Saifullah finally observed that if Ministry of IT was so powerless and was of no use, why not to abolish it.