The prices of imported mobile phones are expected to be raised from July 1, 2024, as duties and taxes on the commercial import of mobile phones will be increased in the coming budget (FY2024-25).
Sources told ProPakistani that the Federal Board of Revenue (FBR) has suggested implementing a federal excise duty (FED) on mobile phones, besides a gross assessment of FED on imported handsets, with a special focus on increasing PTA tax on luxury phones.
Currently, imported mobile phones are subject to a General Sales Tax (GST) rate of up to 25 percent, but the upcoming Finance Bill proposes to increase this rate even further. This proposal is also aimed at supporting the overall effort of the federal government to enhance its tax revenue by at least Rs. 2 trillion next fiscal year.
At present, sales tax is applicable on CBUs at the time of import or registration (IMEI number by CMOs). Sales tax is also applicable on imports in CKD/SKD condition and supply of locally manufactured mobile phones in CBU condition.
The proposal is to raise duties and taxes on the import of cellular phones, CKD/SKD condition, and their parts in the upcoming budget.
The private sector has proposed that the government to abolish rate of advance tax on telecom subscribers completely as the majority of the subscriber’s base falls below the taxable limit and is hampering the affordability of mobile service.
In its taxation proposals for budget 2024-25, the OICCI also recommended the government to revamp the withholding tax regime as it will make the tax claims and its verification mechanism more transparent with minimum operational hassles.
But through the Finance (supplementary) Act, 2021, the rate of withholding tax increased from 10 percent to 15 percent. Increased tax hampers the affordability of mobile service which is a critical service for the entire population and more than 70 percent of the population of Pakistan lives below the poverty line. Telecom service is also critical for economic growth of a country.
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