Mobile Phone Taxes Even Exceed the Figures Announced in Budget

In the budget 2024-25, the government announced an increase in the ad valorem sales tax on mobile phones. The mobile phones priced under $500 were subjected to 18% tax while the tax slab for $500 dollars and above phones remained the same. However, market analysis and sources indicate that the actual tax hike is much higher, reaching a staggering 60% in some cases.

For example, the customs duty on the LG V60 and Xperia 5 has increased from approximately Rs 3850 to Rs 6200. The duty on the Xperia 5 Mark 3 has been increased from Rs 12000 to Rs 20000. In another notable example, a Sony phone that previously had a customs value of Rs 660 has now reached to1408, as you can also see in the image given below.

Such drastic increases have raised concerns among industry stakeholders and consumers. Moreover, these high mobile phone taxes are likely to drive consumers towards illicit means to bypass PTA registration. It can also lead to the expansion of the black market as the high costs imposed are expected to make legal imports and registrations financially unfeasible for the majority of the people.

While it’s clear that the government plans to increase revenue through higher taxes, at the same time we can’t neglect the adverse effects on the mobile phone market and consumer behavior. Therefore, a reevaluation of these tax policies could help to maintain a thriving mobile phone market.

Reasons to Avoid Paying High Taxes:

• The new taxes majorly affect middle and lower-income consumers, and make it harder for them to access modern technology.
• The increased financial strain on consumers can reduce spending power, which negatively impacts the overall productivity of the country.
• The high taxes encourage illicit means of bypassing taxes and black market transactions. It could result in a loss of revenue for the government and potential legal issues for consumers.