The Government of Pakistan on Sunday indicated it may reduce taxes and duties on imported mobile phones worth up to $200, as lawmakers in the National Assembly Standing Committee on Finance sought relief for consumers.
In a briefing to the committee, Federal Board of Revenue (FBR) Chairman Rashid Langrial said the government could consider reducing taxes on mobile phones priced up to $200, as this would have a limited fiscal impact of around Rs. 1 billion.
Chaired by PPP MNA Syed Naveed Qamar, the committee was briefed on the taxation structure for imported and locally manufactured mobile phones.
During the meeting, committee member Jawed Hanif Khan of the MQM criticized the budget, claiming it had failed to provide meaningful relief to the public. To this, State Minister for Finance Bilal Azhar Kayani questioned why the government had introduced amendments to the Finance Bill if no public relief was being offered.
PPP committee member Hina Rabbani Khar questioned the rationale behind the taxation framework, whether the measure was intended as a revenue-generating initiative or aimed at protecting specific market interests. She argued such a significant tax burden should not be imposed on mobile phone purchases.
Responding to lawmakers’ concerns, the FBR chairman said taxes on imported mobile phones constitute an important source of government revenue and form part of the country’s revenue targets. He informed the committee that the government collects approximately Rs. 37 billion annually in taxes from imported mobile phones, of which around Rs. 21 billion comes from imports of Apple devices.
Finance Secretary Imdadullah Bosal warned that any reduction in taxes on lower-priced phones would require the government to find alternative sources to compensate for the revenue shortfall.
According to the FBR briefing, imported mobile phones valued up to $30 face an effective tax rate of 25%, while phones priced between $31 and $100 are subject to a 36% tax rate. Handsets valued between $101 and $200 are taxed at 40%, while phones in the $201-$350 category face an effective tax rate of 38%. Smartphones priced between $351 and $500 are taxed at 40%, while devices worth more than $500 face an effective tax burden of 41%.
Officials said the tax amount per handset ranges from about Rs. 1,500 to Rs. 141,500 depending on the device’s value. The average effective tax rate across all imported mobile phone categories stands at 39.6%.
Concerns over non-PTA phones
Committee members noted that millions of non-PTA-approved mobile phones were currently available in the market and suggested introducing an installment-based payment mechanism for taxes and duties on mobile devices.
Lawmakers urged the FBR and the Pakistan Telecommunication Authority to jointly develop a plan allowing consumers to pay mobile phone taxes in installments, arguing that installment facilities are widely available globally even for small-value purchases. The committee chairman directed the FBR and PTA to present a workable proposal on the matter in future meetings.