At present, telecom operators are charging 2 percent ownership tax on recharge cards. [break]"Imposing ownership tax on SIM card that customers once buy makes sense, but imposition of similar tax on recharge card is totally unfair," said Prem Prasad Paudel, director at DoCSM.
Following complaints from the customers, the department has already written to the Ministry of Commerce and Supplies (MoCS) to coordinate with the concerned ministry for removing the tax.
The department pushed the government to eliminate the unfair practice mainly after the telecom operators in their clarifications said they have been imposing such charge because prevailing Finance Act allows them to do so.
"We studied the Act ourselves. What telecom operators said was true. The presence of the provision in the Act has only created space for the operators to act unfairly. Hence, we have requested the MoCS to initiate for removing this provision from the Finance Act," said Paudel.
Paudel said the DoCSM has requested the government to instruct telecom companies to limit the imposition of ownership tax on SIM cards only. "We hope the MoCS would soon write to the Ministry of Information and Communications (MoIC) to end the existing unfair practice," Paudel added.
Telecom operators, on the other hand, argued that the ownership tax charged on recharge card was actually for the SIM card of pre-paid users.
"We charge Rs 1,130 as ownership tax on post-paid SIM card. But we do not impose such tax on pre-paid SIM because we believe it might be difficult for pre-paid users to pay the tax at one go. Hence, we are collecting the tax through recharge card by charging nominal amount on it," said Gunakeshari Pradhan, spokesperson at Nepal Telecom (NT).
However, DoCS officials said such arguments are not justifiable. “It is unfair for telecom operators to say that they will charge ownership tax for infinite period because they did not charge it at the time of selling SIM," said Paudel.
"If we allow that, after some time pre-paid users would be paying more in tax than post-paid users. Will this be fair?" he questioned.
Customers purchasing recharge card worth Rs 100 get talk time of Rs 78.87 only as Rs 7.89 is deducted as TSC (telecom service charge), Rs 11.50 as VAT and Rs 1.74 as ownership tax.
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