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Wednesday, September 28, 2022

Alert! Check new prices before deciding to buy a phone as taxes are yet again increased

If you are thinking of asking your relative or a friend to bring you an expensive phone say iPhone 13 Pro Max from abroad, think again as government has yet again increased taxes on imported phones.

The mobile industry of Pakistan has been making strides in terms of production volumes and sales. The production of mobile phones by local manufacturing plants in the year 2021 surpassed the total number of mobile phone imported.

Following the Finance Supplementary Bill — popularly termed as ‘mini-budget’ which proposes significant increases in tax rates for mobile phones and telecom devices, majority of consumers will have to bear these ever-new taxes.

Phones from abroad are now being subjected to 17% sales tax instead of a fixed sales tax. The total tax will also include customs tax.

Let’s suppose you want to buy an iPhone 13 Pro max in Pakistan. The phone will cost you $1,730 which is Rs 3,05,070. The total tax will be 51,862+34,000 = 85,862 for the high end iPhone.

If you have a passport on which you came back with the phone, it will cost you a little less, 51,862+26,000=77,862.

As far as other phone brands are concerned, the taxes are equally raised to almost double on different price ranges.

Price BracketNew TaxOld Tax
100-200 USDPKR 25,000PKR 11,500
200-350 USDPKR 49,000PKR 16,500
350-500 USDPKR 68,500PKR 28,800
Above 500 USDPKR 85,500PKR 46,500

Other than this, the tax on mobile phone recharge is also increased. The federal government has decided to charge a 15 percent withholding tax on every prepaid mobile phone recharge.

“If a person can afford a phone worth almost 300k, then he can pay 78k too. These phones have inelastic demands,” a government source said about the tax increase after it created quite a stir on social media.

“Most smartphones sold in Pakistan (more than 80%) and mid category (between $150-200). 70% of these are now made in Pakistan and have very little tax on them. The ones in the range that are imported have a tax of around Rs 5-8k on them,” the source added.

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