Putrajaya warns telcos against raising prices of mobile services

GST will be applied to mobile devices such as tablets and smartphones but not on airtime and starter packs provided by telcos. – File pic, April 2, 2015.

Putrajaya today warned telcos of legal action if they continued to charge extra for postpaid and prepaid telecommunications services, as the 6% goods and services tax (GST) was replacing the previous service tax of 10%.

Deputy finance minister Datuk Ahmad Maslan said the broad-based consumption tax replaces the old service tax, which was also charged at 6% on prepaid services.

For prepaid services, the prices for top-ups, for example, remain unchanged.

"It should remain the same. If the top up is RM5, it should remain RM5.

"If they are are stubborn, we will bring them to court. It will be the first case of profiteering. I am sure you will agree to this," he told Datuk Sapawi Ahmad Wasali (BN - Sipitang).

He added that since the implementation of GST yesterday, a total of 815 complaints have been received, of which 40% were on prepaid services.

Thousands of Malaysians took to social media yesterday to complain that they were overcharged for items that are supposed to be zero-rated, like newspapers and prepaid top-ups.

Communications and Multimedia Consumer Forum of Malaysia (CFM) had said prices and corresponding airtime for SIM packs, starter packs and reload coupons were maintained.

International roaming services by Malaysian telecommunication companies are classified as zero-rated supply, meaning they will not be subjected to GST.

However, the tax will be applied to mobile devices such as tablets and smartphones, certain contents, applications and other telecommunications products and services.

Under GST, there are more than 900 goods exempted from the tax, including rice, flour, vegetables, sugar, fish, chicken, salt, cooking oil, eggs, beef, chicken, mutton, spices, as well as local favourites such as cencaluk, budu and belacan.

Essential services such as public transport, financial services and education are also exempted.

Putrajaya had previously defended its move to peg the GST at 6%, saying that not only it would strengthen the country's economy, but a slew of measures had been put in place to help the lower-income group.

The GST, known as value-added tax (VAT) in some countries, is imposed on goods or services at each stage of the production and distribution chain.

- TMI