In budget 2015, Government imposes double sales tax on cellular phones for fiscal year 2015/16. While the regulatory duty which was imposed in January 2015 by the Federal Board of Revenue FBR has been abolished in the budget announced for fiscal year 2015/16. The sales tax pertinent on all cell phones of different types has been revised from Rs. 150, 250 and 500 to Rs 300, 500 and 1000.
This revision and increase in sales tax of cell phones will surely affect the end users as they will be charged high price for cell phones. Companies and shopkeepers will put all the expenses on the end user to cover up the increased sales tax on the cell phones as a result the end user has to suffer and bear all the increase in the prices of cell phones.
Pakistan is an emerging market for cell phones and cell phones have penetrated into the live of everyone with about 136 million users and have a great potential to rise even more. This sector also contributes a lot to the economy of the country but such unfavorable government policies towards this sector and hike in the taxes can degrade the cell phone market in Pakistan hence affecting the growth potential of the cell phone sector.
After the announcement of increase in the sales tax on cell phones, various reactions have been observed against the decision from the traders. Traders have rejected the government’s decision and demanded steps should be taken to further improve the mobile phone sector as government gets benefited from this sector in terms of tax revenue.