Pakistan : Sales Tax on mobile phones increased

The Federal Board of Revenue has increased sales tax from Rs 250 per set to Rs 1000 per set on smart cellular phones or satellite phones and Rs 250 per set to Rs 500 per set on other mobile phones. In this regard, the FBR has issued SRO.280(I)/2013 here on Friday in line with the latest IT technology of cellular/mobile phones industry.

According to the notification, the fixed amount of sales tax would now be collected at import stage, and would not be collected at the time of activation of mobile phone as specified in the rescinded SRO.542(I)/2008. The FBR will collect sales tax of Rs 1000 per cellular mobile phone in case of smart phones or satellite phones, where the term “Smart phone” means a cellular mobile phone having any of the following characteristics:-

4GB or higher basic memory; operating system of the tyres IOS, Android v2.3, Android Gingerbread or higher, Blackberry RIM or Windows 8 or higher; touch screen; 5 mega pixel of higher mega pixel camera or Dual core or higher processor. The FBR will collect fixed amount of Rs 500 per cellular mobile phone in case of other than smart phone or satellite phone.

Sources told this scribe that the SRO.542(I)/2008 was based on the obsolete technology. The old SRO has specified that sales tax would be collected at the time of activation of the mobile phone. The practice of activation from cellular companies is not in practice and now mobile phones are activated just by putting SIM in the mobile phone. Thus, the SRO.542(I)/2008 was working on the obsolete technology which is no more applicable. The new policy has been aligned with the latest IT technology of the mobile phones.

Sources said that the FBR has collected a very negligible amount of sales tax at the time of activation of new mobile phones. Now, the charge of levy at the import stage would ensure sales tax collection on each set. Under the old policy, the incidence of sales tax was same on all kinds of mobile phones. There was uniform rate of Rs 250 per set sales tax on smart cellular phones, satellite phones or all other kinds of mobile phones. Through a revised policy, the FBR has increased the incidence of sales tax on the import of expensive phones like smart cellular phones, satellite phones etc. However, the incidence of sales tax is very low on the less expensive mobile phones.