Tax Hike on Mobile Phones

Government has increased customs duty on importing mobile phones in the federal budget for the financial year 2021-22 to encourage local manufacturing.

After the increase, customs duty will have to be paid at Rs. 300 on mobile phones up to $30, or mobile phones worth Rs 4,500. Similarly customs duty has been fixed at Rs 3,000 on mobile phones up to $100.
Importing mobile phone sets of $100 to $200, or Rs 15,000 to Rs 31,000, will now have a customs duty of Rs 7,500, which was earlier fixed at Rs 4,500 per set.

Importing mobile phones ranging from Rs 31,000 to Rs 55,000 will require a customs duty of Rs 11,000, which was earlier fixed at Rs 6,000.

While customs duty on importing small mobile phones has been increased in the federal budget, import duty on handsets ranging from $350 to $500 has been reduced from 17,500 to 15,000, while the duty on sets above $500 has been reduced from Rs 31,500 to Rs 22,000.

How expensive will mobile sets be?

According to Muhammad Rizwan, president of Electronic Dealers Association, Karachi, small businesses will suffer severely after this  increase. He stated that with the increase in import duty, people associated with the sector are now investing in other sectors.

“The quality of mobile phones manufactured locally needs to be improved and a large number of people are still not satisfied by locally manufactured phones, and have to buy phones at high prices,” he said.

According to Muhammad Rizwan, import duty on mobile phones worth $100 to $300 should have been reduced as mobile phones of this price range are bought the most by the common man. But instead, their duty has been increased by 200%, he said.

He added, “The smartphone that should be available for Rs 15,000 to Rs 25,000 is available in Pakistan for Rs 30,000 to Rs 40,000, but after the budget, the same smartphones will no longer be available for less than Rs 50,000,”

He said the government has reduced customs duty on mobile sets of more than $350, while the relief should have been paid on mobile phones worth $100 to $300.

“Smartphones worth Rs 70-80000 are not needed by a common man. The common man needs a good smartphone for Rs 25-30,000 but the government is not giving relief to this class,” he went on.

Secretary Mobile Dealers Association Muhammad Faisal says, “Companies manufacturing mobile phones at a local level must give incentives. Unless international quality products are available in the market, a competitive atmosphere cannot be maintained,”

He said the government should ensure supply of international quality products to the market to maintain the atmosphere of competition so that the quality of locally produced mobile phones is in accordance with international standards.

He added, “Incentives for locally manufactured mobile phones will not be beneficial unless their quality is improved, if the local industry is to be promoted, products that can also be exported will have to be manufactured,”

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