Mobile phone handset prices are likely to increase again as the federal government is reportedly considering to increase regulatory duty on import of mobile phones.
Finance Minister Asad Umar has stated that the government is planning to introduce necessary changes in the Finance Act 2018 to make it more relevant to the current economic state of the country.
The previous government had imposed a levy of up to Rs 5000 on importing mobile phone handsets in the budget 2018-19 which came into effect from July 1, 2018, through Finance Act 2018.
The objective behind the move was to curtail growing imports and generate additional revenue. However, mobile phone import witnessed a phenomenal growth of 19.44 percent in the fiscal year 2017-18 – $847.654 million compared to $709.690 million during the same period of 2016-17.
According to the Finance Act 2018, smartphones of different categories are charged under the following criteria:
- The levy is zero where the import value of handset (including duties and taxes) does not exceed Rs10, 000.
- There is a levy of Rs 1000 per set where import value of handset (including duties and taxes) exceeds Rs10, 000 but does not exceed Rs 40, 000.
- There is a levy of Rs 3000 where the import value of handset (including duties and taxes) exceeds Rs 40, 000 but does not exceed Rs 80, 000.
- There is a levy of Rs 5000 where the 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) @ Rs175/set on completely knocked down (CKD)/semi-knocked-down (SKD) kits of mobile phones had been imposed.
However, the PTI-led government is all set to introduce a new budget where different measures are under consideration to enhance revenue, exports and curtail imports to reduce the trade deficit, ease pressure on the local currency and narrow budget deficit, by imposing a regulatory duty on non-essential items.
Commerce Division has reportedly prepared a list of non-essential items and the government is considering measures to rationalize non-essential imports to reduce the quantum of trade deficit. According to officials, the government is likely to enhance regulatory duty on mobile imports.
However, according to experts, this may result in an increase in mobile phone handsets prices as well as encourage the smuggling of mobile phones.