20 Paisa Tax on Each SMS, GST Lowered to 19%, Sim Activation Tax Slashed to Half

Federal Budget year 2009-2010 didn’t bring exiting news for Telecom and IT industry. There are few major things that we want to communicate at this point of time

• 20 Paisa Tax is imposed on each SMS – killing all packages. Meaning that for subscriber, minimum price for an SMS would be 20 paisas (that will go into Govt’s pocket)
• GST has brought down to 19 percent from 21 percent. Industry demand was to bring GST down to 16 pecent
• SIM Activation tax has been slashed by 50 percent, now new SIM Activation tax will be Rs. 250 which was previously Rs. 500. Industry had demanded to cut SIM activation tax by 100 percent.
• Regulatory duty from handsets has been slashed, while custom duty has been brought down to Rs. 250. Meaning that total of Rs. 250 will be applied as taxes on each handset import.

For cellular companies, operating expenses will increase as we saw new taxes in multiple items, such an advertising.

We will be bringing analysis and industry feedback on these announcements soon. Stay tuned

Note: Changes in tariff with new taxes will be appliacble from July 1st, 2009

Update: SMS tax has been taken back by government of Pakistan