Federal Cabinet Approves Industrialization of Telecom Sector & Reduction in Taxes

In the light of the recommendations of the Ministry of IT and Telecommunication, the Federal Cabinet has unanimously approved the industrialization of the telecom sector and the gradual reduction in taxes imposed on the telecom sector and mobile phone users. This is a major achievement that will directly benefit not only mobile phone users but will also help spread the spirit of digital Pakistan (connectivity) to remote areas of the country. This was stated by Federal Minister for Information Technology and Telecommunication Syed Aminul Haq while addressing a crowded press conference at the Press Information Department on Thursday.

Federal Cabinet Approves Reduction in Taxes for Telecom Sector and Mobile Phone Users

The Federal Minister for IT said that under the decision of the Federal Cabinet, on the proposal of the Ministry of IT, the telecom sector would be given the status of “Industry”. This tax will be reduced from 12.5% ​​to 10% and in the financial year 2022-23 to 8%. Similarly, the federal excise duty on telecommunication services has been reduced from 17% to 16%.

According to Syed Amin-ul-Haq, on the suggestion of the Ministry of IT, the collection of Rs. 250 on the issuance of new SIM is being abolished. The Cabinet also approved the introduction of a simple and easy tax system and exemption of the telecom sector from all withholding taxes.

He said that the Cabinet has also given the approval to reduce the tax on telecommunication services from 8% to 3% for all telecommunication companies with PTA licenses. The Federal Minister said that on our recommendations, the Federal Cabinet has approved the reduction of 4% customs duty and 9% regulatory duty on import of telecommunication equipment as well as on raw materials of optical fiber cable manufacturing industry. It has also issued instructions to the FBR to reduce taxes from 20% and 7% to 5% and 3% respectively.

On the question regarding the performance by the Ministry of IT and Telecommunication in the last two and a half years, Federal Minister Syed Aminul Haq said that it was my commitment that Prime Minister Imran Khan’s vision of “Digital Pakistan” will become a reality. The Ministry of IT will not hold a press conference until the projects are put into practice and digitized, as we believe in practical measures rather than air talk. These projects and initiatives are also, directly and indirectly, creating more than one lac jobs.

Syed Amin-ul-Haq said that for the first time in the history of Pakistan, after the formulation of the Right of Way Policy, the Ministry of IT and Telecommunication has been taking the revolutionary step of getting its approval from all forums. The policy sets out a fee structure for working in the required areas. Similarly, telecom facilities will be considered as “critical infrastructure” and no obstruction or unnecessary problems will be allowed for this purpose. 

Other important issues, including “Common Services Corridor”, the security of telecom infrastructure, safety measures on health principles, have been incorporated in the Right of Way policy, which will be binding on all concerned agencies and administrations. There will be a one-window operation

The Federal Minister said that the Universal Service Fund of the Ministry of IT has played a major role in the outstanding performance under which 32 different projects worth about Rs. 22 billion have been launched during the 31 months of the present government. And in 10,132 villages in 50 districts of backward areas, broadband services are being provided to about 4 million people.

According to Syed Amin-ul-Haq, the Pakistan Software Export Board under the Ministry of IT has received 40% additional export remittances in the first six months of the current financial year till December 31, 2020. It will also cross the billion target. Under the Pakistan Software Export Board, dozens of projects titled “Tech Destination Pakistan” have been launched to promote the IT industry. The aim is to provide facilities and training opportunities to IT professionals and IT companies as well as to attract local and foreign investors.

On the other hand, work has been started to set up a network of software technology parks across the country, including 40 software technology parks in Swat, Bannu, Quetta, Faisalabad, Karachi, and Sukkur under the public-private partnership. These parks in Gilgit and Hyderabad are making millions of dollars in business within a few months of their establishment. Similarly, PC One was submitted to provide a “Rental Subsidy” to 25 software technology parks in rural areas. The foundation stone for the establishment of IT parks in Karachi and Islamabad at a total cost of Rs 44 billion will be laid soon.

The Federal Minister said that the National IT Board, a subsidiary of the Ministry of IT, had provided all the technical facilities and support for the structure of the National Command and Operations Center (NCOC) during the outbreak of Covid-19 without NITB (NCOC). It would have been almost impossible to establish in the short term. NITB Digital Pakistan has developed 35 useful mobile applications and web portals for providing public services at the fingertips under the Vision, including Pak Naghaban, Code Information Platform, Resource Management System for NDM, and Real-Time Dashboard.

He said that under Ignite, incubation centers have been set up in 5 major cities of the country where 691 start-ups have registered themselves. Similarly, plans to set up incubation centers in Faisalabad, Hyderabad, Kamra, Mardan, and other cities are in the final stages. In the practical field of tea exports, 200 million rupees are being brought into the annual revenue of the country, while more than 1.7 million people have so far enrolled through the online training platform “Digi Skills”.

Syed Amin-ul-Haq said that the performance of the SCO under the Ministry of IT and Telecommunication in Gilgit-Baltistan and Azad Kashmir has also been exemplary in the present government. The SCO received revenue from Gilgit-Baltistan and Azad Kashmir for its services in 2018-19, an increase of 40 percent over the previous year. Revenue of Rs. 5.50 billion was achieved while GSM network in Gilgit-Baltistan was expanded to 75% in the last two years under SCO for which 350 mobile towers were installed to transform from 2G network to 4G network.

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