In the backdrop of the Federal Board of Revenue (FBR)’s decision to enhance duties on mobile phone sets both basic and smart, prices of the mobile phone sets have increased by Rs 1,500 to 2,000 in the market.
Sources said the SRO issued in this regard by the Board had been crafted in such a way that even cheapest cellphone being imported from China and available in the range from Rs 2500 had come under the higher slab of the sales tax on mobile phones.
They said that according to the SRO issued on Friday, FBR has made it obligatory for importers to pay Rs500 in sales tax on basic cellular phones. On the import of smartphones that are described as ones having 4GB basic memory and a touch screen, the importer will pay Rs1, 000 in sales tax at the import stage. Market sources said that 4GB memory or dual core processors were becoming a normal feature in the mobiles phones.
Market sources even went on to say that after failing in meeting its revenue targets, the FBR which introduced amnesty scheme on vehicles and for textile sector, had invented that new method to enhance its collection.
A big mobile phone seller and importer while talking to Business Recorder said that if the Board had to made this decision keeping in view the increasing number of import of mobile sets then it should have taken its importers and traders into confidence on that issue and duty should have been levied in the next budget and not with immediate effect. He said cheaper Chinese brands would be most effective under this decision, which was used by the low income group in our country.
Meanwhile, the Lahore Chamber of Commerce and Industry (LCCI) demanded of the government to immediately withdraw SRO 280(I) 2013 as it would not only destroy the mobile phone businesses but would also promote smuggling and encourage undocumented sector.
LCCI Vice President Mian Abuzar Shad was talking to a 50-member Hall Road delegation called on him under the leadership of Babar Mehmood to protest the imposition of up to Rs 1,000 in sales tax on smartphones at import stage.
The LCCI Vice President said the Caretaker Prime Minister should take a serious notice of issuance of anti-business SROs at a time when the economy was already facing multiple internal and external challenges.
He said that instead of focusing on expansion of tax net by bringing the untaxed sectors into the tax net, the FBR was squeezing the existing tax payers but all such moves aimed at tarnishing the image of the government would be resisted tooth and nail.
He said it would have been wiser on the part of the FBR if it had given at least one month time to the mobile dealers for clearance of their shipments instead of slapping that harsh measure with one stroke of pen.
He said authorities concerned should have taken the stakeholders to that SRO on board instead of taking unilateral decision just to meet revenue target.
Mian Abuzar Shad said LCCI strongly rejected the SRO 280(I) 2013 and called for its immediate withdrawal in the larger interests of the country. He also assured the visiting delegation of fullest LCCI support for the acceptance of their just demands.
Speaking on the occasion, Chairman Hall Road Association Babar Mehmood said the business community reserved the right to go on strike against such harsh measure that was bound to cause closure of businesses.
He said the government move would also jack up the graph of unemployment as thousands of people are attached with mobile phones businesses directly or indirectly.
He said that on the one hand the FBR claimed to take measures for promotion of documentation of the economy while on the other it took steps to encourage smuggling.
On Friday, the FBR issued a notification that had made it obligatory for importers to pay Rs 500 in sales tax on basic cellular phones. On the import of smartphones that are described as ones having 4GB basic memory and a touch screen, the importer will pay Rs 1,000 in sales tax at the import stage.
According to the FBR’s notification, the import of satellite phones will also be subject to a similar rate of taxation. Cellular and satellite phones’ import is also subject to five percent income tax.
Pakistan is a big market for all types of smartphones, and the country spends millions of dollars per annum on import of cellular phones, particularly smartphones.
S.R.Os / Notifications:
Date:April 04, 2013
SRO Relates To:SROs>> Sales Tax
SRO 280(I)/2013 dated 04-04-2013 is issued to charge sales tax on Cellular Mobile Phones & Satellite Phones
SRO 280(I)/2013 dated 04-04-2013 is issued to charge sales tax on ‘Cellular Mobile Phones & Satellite Phones’ at the rates and subject to the conditions and restrictions specified in this Notification.
This Notification is issued in supersession of SRO 542(I)/2008 dated 11-06-2008 which is given below: