BBC News
The federal government of Pakistan has announced to increase the tax on mobile phones imported into the country by removing the sales tax exemption. Federal Finance Ministry spokesman Muzammil Aslam announced in a news briefing that the sales tax exemption on mobile phone imports is being abolished.
Muzammil Aslam confirmed this while talking on the telephone and said that the exemption of sales tax on imported mobile phones is being abolished under the terms of IMF program.
It should be noted that under the IMF conditions, sales tax exemption of Rs 350 billion will be abolished for which the government will get the amendment in the finance bill passed by the parliament. The government's announcement to increase taxes on mobile phone imports comes at a time when the country is witnessing a steady increase in the use of mobile phones.
It should be noted that along with the imported phones in Pakistan, mobile phones are also manufactured locally. Has done
According to experts in the field, raising taxes on the import of mobile phones will increase their prices, the burden of which will have to be borne by consumers. According to experts, despite the local production of mobile phones, the demand for imported mobile phones is very high due to their quality.
How many mobile phones is Pakistan importing?
The manufacture of mobile phones at the local level in Pakistan started some time ago but the import of mobile phones in the country has been going on for many years.
According to the Pakistan Telecommunication Authority (PTA), Pakistan imported more than $ 644 million worth of mobile phones in the first quarter of the current financial year.
The last four months of the last financial year saw an increase of 15.5 per cent in imports of mobile phones worth $ 558 million.
According to the Pakistan Bureau of Statistics, the country imported 2.065 billion worth of mobile phones in the fiscal year ended June 30, 2021, which is about 50% more than the import of mobile phones a year ago when the country had 1.369 billion. Billions of dollars worth of mobile phones were imported.
Statistics on the number of imported mobile phones show that in the financial year 2021, more than 40 million mobile phones were imported in the country, whereas a year ago, the number of imported mobile phones was around 21 million.The number of mobile phones manufactured in the country has doubled in the first 10 months of this year to over 18 million, according to official figures.
How much will the tax on import of mobile phones increase?
Talking about the taxes levied on the import of mobile phones in Pakistan, Dr. Ikram-ul-Haq, a tax expert, said that at present, customs duty and activation charges are levied on its import.
He said that the PTA calculates the activation charges which is collected by the customs department. According to Dr. Ikram, in the budget of the current financial year, the regulatory duty on mobile phones was increased from 32 to 240 percent depending on the price of mobile phones.
He said the duty was based on the price of mobile phones and the tax authorities had increased the regulatory duty on mobile phones to increase the use of locally manufactured mobile phones.
Dr. Ikram said that no sales tax is levied on the import of mobile phones but now the government is going to increase the tax rate by imposing sales tax. Referring to schedule six of sales tax, Dr. Ikram said that under the exemption given in it, sales tax exemption has been given on the import of mobile phones.
Finance Ministry spokesman Muzammil Aslam also confirmed that the tax rate on imports of mobile phones was being increased. He said the tax was being raised on imports of mobile phones worth more than 200.
Muzammil Aslam said that mobile phones are considered as a luxury item so sales tax exemption on them is being abolished.
Talking about raising the tax on import of mobile phones in Pakistan, Dr. Ikram-ul-Haq said that it is part of the agreement reached with the IMF to increase the tax. He said that like other imported goods, the tax rate on mobile phones should also be increased in order to increase the country's revenue.
It should be noted that Pakistan is preparing to bring in a mini-budget as a precautionary measure to release more than 1 billion in installments from the IMF, which would include the abolition of sales tax exemption of about Rs. 350 billion as well as imports. Domestic tax revenue will be increased by increasing the rate of tax and levy on petroleum products.
Increasing the tax rate on imports of mobile phones is also part of the deal with the IMF. On the other hand, according to experts, the tax rate on imports is being increased to control the growing trade deficit of the country.
The month of November in the current financial year recorded the highest trade deficit in the history of the country in just one month, when the difference between imports and exports was more than five billion dollars, while the trade deficit in five months exceeded 20 billion dollars. Has gone The country's growing trade deficit is widening the current account deficit, which is causing a sharp decline in external payments.
How will consumers be affected by the tax on the import of mobile phones?
Rizwan Irfan, President, Karachi Electronics Dealers Association, said that the imposition of 17% sales tax on mobile phones would cost Rs. The price of a mobile phone worth Rs 50,000 will increase to Rs 58,500 and a mobile phone worth Rs 100,000 will increase to Rs 17,000.
However, Muzammil Aslam has said that this sales tax exemption is being abolished on mobile phones worth 200, ie on mobile phones costing Rs 40,000 and above which are used by the 'rich' class.
Rizwan Irfan said that mobile phones are in the category of information technology due to which sales tax is not levied on them but now the government is putting it in the category of electronics due to which sales tax will be levied on all levels of import. ۔
He said that this move of the government was against its own policy that while the government was moving towards digital Pakistan, it was making it more expensive by increasing the tax on the most important factor i.e. import of mobile phones.
According to him, at present people are moving towards mobile banking, online shopping and business and online education and for this the use of mobile phone and apps on it is increasing.
We are still lagging behind the rest of the world because the world is moving towards FiveG technology which requires more standard phones while the majority of us are still using 3G and 4G."
Rizwan Irfan added that raising taxes on mobile phone imports would inevitably make phones more expensive for consumers who would be beyond the purchasing power of consumers.
