Budget 2017-18: ICT Industry Gets Relieve in Taxation and Incentives

The government has announced the budget 2017-18 today. Finance Minister of Pakistan, Muhammad Ishaq Dar presented the much-awaited federal budget in front of National Assembly. In Budget 2017-18: ICT Industry Gets Relieve in Taxation and Incentives. Now Telecom companies and mobile phone sellers will get some relief as withholding tax and Federal Excise Duty (FED) on telecom services have been reduced as well.

Budget 2017-18: ICT Industry Gets Relieve in Taxation and Incentives

Please Download the Complete Budget Here:  SalientFeatures-1.pdf (279 downloads )

Here are some Key points of Budget 2017-18 highlighting the relieve in taxation and incentives of ICT industry:

• Reduction of Withholding Tax Rates for Mobile Phone Subscribers

The number of mobile phone subscribers in Pakistan has shown a gradual and sustained increase. In order to promote mobile phone density, the rate of withholding income tax for mobile phone subscribers is being reduced from 14% to 12.5%.

• Introducing the Concept of Startups

In order to promote innovation and entrepreneurship in Information Technology the concept of start–up has been introduced. In order to incentivize the start-ups, tax exemption is being accorded to profits earned by such start-ups for a period of three years. Moreover, exemption from levy of minimum tax as well as withholding tax (as recipient) is also being accorded to such start-ups.

• Exemption on Cash Withdrawal by Branch-less Banking Agents

At present, tax @ 0.3% and 0.6% is deducted upon aggregate cash withdrawals exceeding Rs.50,000 per day from filers and non-filers respectively. In order to promote digital payments in the country and to 13 assist in the realization of the long term vision of Universal Financial Inclusion in Pakistan, exemption is being accorded to branch-less banking agents operating under the Asaan Mobile Account Scheme from withholding tax on cash withdrawals made for the purpose of making payments to their respective customers.

• Rationalization of Sales Tax on Mobile Phones

Mobile phones are chargeable to sales tax at the rates of Rs. 300, Rs. 1,000 and Rs. 1,500 per mobile phone set depending upon categories of mobile phones. It is proposed to merge sales tax rates of Rs. 300 and Rs. 1,000 per set into Rs. 650 per set. The proposal will promote use of information technology and will also reduce disputes on categorization of mobile phones.

Exemption from sales tax is also proposed to be provided on export of IT services.

• Reduction in Federal Excise Duty on Telecommunication Services

Federal Excise Duty on telecommunication services is proposed to be reduced from 18.5% to 17%.

• Revenue Measures

CD @ Rs. 250 per set converted into RD @ Rs. 250 per set on mobile phones.  CD @ 11% and 16% exempted and instead RD at uniform rate of 9% levied on the telecom equipment

As Pakistan’s ICT industry is growing very steadily and a relief in taxation will surely help the country to get more benefits from this industry.