Mobile Phone Taxes Increased in Latest Budget: Details & Impact

Yesterday, the federal government of Pakistan presented the national budget for the fiscal year 2024-25. In the proposed budget, there was a notable increase in taxes on mobile phones, salaried classes, and real estate. As per the official source, a standard rate of 18pc has been proposed for mobile phones valued at under $500. On the other hand, the tax will remain unchanged for phones valued above $500. The tax covers three categories including,

• Completely Knocked Down (CKD)
• Semi-Knocked Down (SKD)
• Completely Built Units (CBUs)

The new tax is expected to impact a broad range of consumers, as it will lead to an increase in PTA taxes on mobile phones. It implies that prices of smartphones in budget and midrange segments will increase.

On the other hand, for the cellphones priced above $500, the sales tax rate will be:

• 25pc ad valorem for imported completely built units.
• 18pc for imported semi-built and locally manufactured completely built.

The change in taxes reflects the government’s strategy to balance its fiscal deficit through the lucrative mobile phone market.

Impact on Industry & Users:

The mobile phone industry stakeholders strongly oppose the newly proposed tax. They assert that it will make mobile phones more expensive, hurting people, especially those with low incomes. In addition, the tax could slow down the country’s shift to high-end technologies like 3G and 4G. Currently, as per the official data, around 40% of mobile users in Pakistan still use 2G phones. Contrarily, in developed countries, 70-80% of people use 3G, 4G, or 5G phones. Therefore, the country needs to take steps to upgrade its technology, but higher taxes might make it difficult for people to afford newer phones.

Also read:

PTA Taxes on All iPhones in Pakistan (100% Authentic)