Govt Considering to Double the Taxes on Mobile Phones

The government is planning to double sales tax (i.e. from Rs 500 for mid-range phones and Rs. 1000 for high-end smartphones) to Rs. 1,000 and Rs. 2,000 respectively for medium and high-end smart phones in the upcoming budget (2016-17).

A proposal is under consideration to substantially raise sales tax on the import of cell phones from next fiscal year.

In budget (2016-17), it has been proposed to enhance sales tax collected at the import stage from Rs 500 and Rs. 1,000 to Rs. 1,000 and Rs. 2,000 respectively for medium and high category/smart phones.

Not to mention, Pakistani government had doubled the sale taxes on mobile phone imports just last year.

So far, during the ongoing fiscal year, the Federal Board of Revenue (FBR) has collected Rs 8.06 billion sales tax on the import of mobile phones during 2015-16 as compared to projection of Rs 8 billion for the said period.

In last budget (2015-16), sales tax rates on cellular mobile phones were revised upward. Therefore, regulatory duty @ Rs. 200 per set was removed on mobile phones w.e.f. date of application of revised sales tax rates i.e. 1st July, 2015.

During last budget, the FBR had increased rate of sales tax on mobile phones to Rs. 300, 500 and 1000, from Rs. 150, 250 and 500, respectively, depending on features in the mobile set.

Mobile phone companies and phone makes have emphasized this time and again that these added taxes on mobile phone users are hurting the growth of industry as well as for the country.

Industry has said that added taxes enhances the entry barrier for a common man and it is less likely for a common man to use smarpthone with increased taxes.

Smartphone penetration in Pakistan has been on the rise, similarly the data usage on smarpthone reached all time high during April 2016. However, with such added taxes on phones and telecom services, the sector could show negative growth during times to come.