Rs92 Billion Collected in Mobile Phone Taxes, 15% Increase in FY 2023-24

Pakistan’s government collected Rs92 billion in advance taxes from mobile phone users during the fiscal year 2023-24, marking a 15% rise compared to the previous year, as reported by the finance ministry.

This figure was revealed in a report on the advance taxes collected over the past five years, presented to the National Assembly on Monday.

In the last fiscal year, Rs80 billion was collected, following Rs61 billion in 2022, Rs55 billion in 2021, and Rs50 billion in 2020.

The advance tax collected from mobile users “is adjustable, allowing consumers to claim refunds in their income tax returns,” the report stated.

In the budget for the fiscal year 2024-25, the government eliminated the existing slab-based sales tax system for mobile phones. This system, which varied according to pricing, had nominal sales tax rates. The government has now introduced a flat 18% ad valorem sales tax on mobile phones valued up to $500, covering imported fully assembled, imported semi-assembled, and locally manufactured phones.

For mobile phones priced above $500, the sales tax rate has been set at 25% for fully assembled imports and 18% for semi-assembled imports and locally manufactured phones.

“Concessionary rates create distortions by only benefiting some specific items in the market, while the standard rate ensures that everyone gets equal opportunity and market forces work effectively,” the finance minister said during his budget speech on June 12.