Govt Adds New Tax of Upto Rs. 5000 on Mobile Phones

A new levy of up to Rs. 5000 on importing mobile phone handsets has come into force through Finance Act 2018 with the start of the new financial year.

To curtail growing imports and generate additional revenue, the previous federal government had announced a new kind of levy of up to Rs. 5000 on importing mobile phone handsets in the budget for 2018-19.

According to the Finance Act 2018, there shall be a mobile handset levy at the rates specified on smartphones of different categories.

Details about the New Tax:

• The levy will be zero where import value of handset (including duties and taxes) does not exceed Rs. 10,000.
• There will be a levy of Rs. 1000 per set where import value of handset (including duties and taxes) exceeds Rs. 10,000 but does not exceed Rs. 40,000.
• There will be a levy of Rs. 3000 where import value of handset (including duties and taxes) exceeds Rs. 40,000 but does not exceed Rs. 80,000.
• There will be a levy of Rs. 5000 where import value of handset (including duties and taxes) exceeds Rs. 80,000 per set.

According to the Finance Act, a levy of Regulatory Duty (RD) @ Rs. 175/set on completely knocked down (CKD)/semi-knocked-down (SKD) kits of mobile phone have been imposed.

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However, according to experts, this may result in an increase in mobile phone handsets’ prices as well as encourage the smuggling of mobile phones.

Growing Smartphone Imports

Mobile phone import witnessed a phenomenal growth of 19.28 percent in the first eleven months (July-May) of 2017-18 as it was $759.969 million compared to $637.14 million during the same period of 2016-17 (July-May).

Mobile phone imports in May 2018, which are $81.362 million, increased by 25.64 percent compared to $64.76 million of imports in May 2017. An increase of 7.72 percent was seen compared to $75.53 million in April 2018, revealed the latest data released by the Pakistan Bureau of Statistics (PBS).

Telco Stats

Overall telecom imports saw an increase of over 11.77 percent during July-May 2017-18 compared to the same period of last year. Total imports were recorded at $1.396 billion during this period compared to $1.249 billion in July-May 2016-17. Telecom import remained at $129.835 million in May 2018 and registered a 10.39 percent growths, as compared to $ 117.613 million during May 2017.

Other telecom apparatus import also witnessed a growth of over 3.95 percent in July-May 2017-18 as it stood at $636.057 million against $611.872 million during the same period of last year.

The caretaker government is reportedly mulling on policy guidelines to reduce import bill by rationalizing import of mobile phone handsets and other telecom apparatus.

Pakistan’s trade deficit reached an all-time high of $33.88 billion during the first eleven months of the current fiscal year with $55.23 billion imports and $21.34 billion exports.

Commerce Division has reportedly started preparing a list of non-essential items and the government is considering measures to rationalize non-essential imports to reduce the quantum of trade deficit.