The government is likely to announce relief packages for the Telecom sector in the budget 2021-22, including the status of the industry, reducing the advance income tax on mobile phone users from 12.5 percent to 10 percent, and further reducing it to eight percent in 2022-23, federal excise duty from 17 percent to 16 percent, abolishing Rs. 250 on SIM cards, and reducing services tax on telecommunication companies from eight percent to three percent.
This was confirmed by the Federal Minister for Information Technology and Telecommunication, Syed Amin Ul Haq. The minister said that the government had agreed, in principle, on the industrialization of the Telecom sector and the gradual reduction of various heavy taxes imposed on it and mobile phone users.
However, a reminder had been sent to the Chairman of the Federal Board of Revenue (FBR) for him to include these measures in the budget proposals. He said that a meeting on these matters withheld the Minister for Finance, Shaukat Tarin, and he assured the incorporation of these incentives in the finance bill.
He added that this will be a major achievement that will directly benefit mobile phone users and will also help to extend the concept of a digital Pakistan to remote areas of the country.
Earlier in March 2021, Haq had announced that the government has approved the introduction of a simple and easy tax system and the exemption of the telecom sector from all the withholding taxes and complex collections.
The Cabinet has approved a reduction of four percent customs duty and nine percent regulatory duty on the import of telecommunication equipment. Further instructions have been issued to the Federal Board of Revenue (FBR) to reduce the taxes from 20 percent and seven percent to five percent and three percent respectively on the raw materials of the optical fiber cable manufacturing industry, he added.
The CEO of Telenor Pakistan, Irfan Khan, expressed his optimism that the government will lower the tax burdens on consumers and operators, and increase the availability of the spectrum. In an online discussion with Julian Gorman, the Head of APAC at the industry association GSMA, Khan said that Pakistan lags in identifying the spectrum as a lifeline for the government’s initiative — Digital Pakistan, but acknowledged an upcoming auction is a step in the right direction.