Govt slaps Rs1,000 sales tax on cell phones

FBR estimates generating Rs5b annually through the measure.

Our Correspondent April 05, 2013
Smart phones that are described as ones having 4GB basic memory and a touch screen, the importer will pay Rs1,000 in sales tax at the import stage.


The caretaker government has targeted cell phone users in its first move to increase declining tax revenues, as it slapped up to Rs1,000 in sales tax on smart phones at the import stage.

The Federal Board of Revenue (FBR) has estimated generation of at least Rs5 billion per annum through this measure.

The move came at a time when tax authorities are facing serious problems in meeting the annual collection target of Rs2.381 trillion. The decision is expected to help curbing increasing imports of luxury items, aimed at reducing the import bill due to declining foreign exchange reserves.

On Friday, the FBR issued a notification that has made it obligatory for importers to pay Rs500 in sales tax on basic cellular phones. On the import of smart phones that are described as ones having 4GB basic memory and a touch screen, the importer will pay Rs1,000 in sales tax at the import stage.

A person buying the expensive Apple iPhone was paying just Rs250 as sales tax, which is a joke, FBR Chairman Ali Arshad Hakeem said while talking to The Express Tribune. 

Earlier, the FBR was charging nominal sales tax at the activation stage, a practice that was abandoned years ago as no one goes to cellular companies to activate phones, FBR’s Member Inland Revenue Operations Raza Baqir said. He said now tax calculation will be made at the import stage, which will help recover dues.

According to the FBR’s notification, the import of satellite phones will also be subject to a similar rate of taxation. Cellular and satellite phones’ import is also subject to 5% income tax.

In a recent briefing to Prime Minister Mir Hazar Khan Khoso, the finance ministry had proposed measures to curb the import bill by levying taxes on luxury items.

Pakistan is a big market for all types of smart phones, and the country spends millions of dollars per annum on import of cellular phones, particularly smart phones.

The officials added that similar measures are also expected in the coming months, aimed at boosting revenue collection.

Published in The Express Tribune, April 6th, 2013.

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Waqas | 9 years ago | Reply

This will help reduce the increasing role of mobile phone in Pakistani society, great! And poor people are not going to buy touch phones so they will not be affected much.

Mustafa Alvi | 9 years ago | Reply

@adnan: What is your definition of a luxury? To be able to do homework assignments on your tablet or phone? To have past papers in your smartphone? To be able to check your mail? To be able to make presentations on the smartphone or tablet? Or to have complete educational courses on the tablet/smartphones?

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