Beginning July, prices of mobile phones will increase by up to Rs1,000 as the federal government has proposed to double the general sales tax (GST) on all types of imported mobile phones.
“The government would abolish the regulatory duty which was to be applied to all types of imported mobile phones at a flat rate of Rs200,” said Finance Minister Ishaq Dar, while announcing the federal budget for fiscal year 2015-16. He proposed an increase of 100% in GST on various categories of imported mobile phones.
The GST on mobile handsets will increase from current levels of Rs150 (low-end handsets), Rs250 (mid-range handsets) and Rs500 (high-end handsets) to Rs300, Rs500 and Rs1,000 respectively.
Pakistan doesn’t manufacture any mobile phone and handsets are imported almost entirely from China.
Though importers will not pay the regulatory duty of Rs200 but increasing GST by 100% will raise the cost.
For example, the price of a high-end phone used to include Rs700 (Rs500 GST and Rs200 regulatory duty), which would now include Rs1,000 in GST – Rs300 more than in the past.
“Increasing taxes on mobile phones without providing any policy on manufacturing or assembling of handsets won’t help the industry in the long run,” Haier Mobile CEO Zeeshan Qureshi said commenting on the proposed increase. “It will have a huge impact on prices,” he added.
Published in The Express Tribune, June 6th, 2015.