Govt to reduce tax on imported mobiles for next fiscal year

A lawmaker said that the National Assembly has included a number of adjustments in the Finance Bill for the next fiscal year to a certain extent decrease taxes on imported mobile phones.

The legislative measures follow a lengthy parliamentary debate after the original draft of the federal budget did not include recommended reforms of the nation’s heavily taxed telecoms sector.

The modifications did not include the extensive tax rollbacks sought by a parliamentary commission, but are a sign of a policy shift towards lowering the burden on mobile customers, said MNA Kasim Gilani.

“This is not enough, we know this, but still whatever has been done let’s take this for this year,” Gilani told foreign media. “We will cut next year, too.

“If a phone costs 200,000 rupees ($720), the tax on it right now was 106,000 rupees to be exact ,” Gilani said, adding that the parliamentary budget committee had urged in March that cellphones be classified as a necessity rather than a luxury asset.

When the main budget ignored these proposals, MPs had earlier this month invoked amendment provisions to take on the luxury GST rate of 25% as well as import obstacles prescribed by statute.

The Federal Board of Revenue (FBR) after a long debate accepted changes in the final wording of the Finance Bill. Gilani said the government had agreed to remove 20 percent Regulatory Duty on all imported smart phones.

Second, the FBR has approved an adjustment for the mid-tier import bracket, which is for devices costing between $200 and $300, including highly saturated market segments. The concession will have revenue impact of around Rs1 billion ($3.6 million) on the states. The luxury GST rate of up to 25% remains applicable to high-end cellphones priced above $500, and the only respite in the current budget cycle is a 20% reduction in regulatory charge.

Lawmakers proposed an amendment in the Pakistan Telecommunication Authority’s (PTA) registration criteria that consumers will be able to pay charge in instalments to deal with the millions of handsets working outside the lawful cellular network.

“PTA can block the device of those who cannot pay the installment in any month, with a small penalty for re-activation,” Gilani recommended. “Make this plan to get more people into the tax net, get their devices registered.”