Phones not luxury items, committee urges tax overhaul

ISLAMABAD: The Federal Board of Revenue (FBR) and the Pakistan Telecommunication Authority (PTA) have been  instructed to prepare a detailed report on taxes applied to mobile phones. Reports of both the FBR and the PTA should cover policy options, international comparisons, and economic impacts as well as possible changes to the current system.

The directives were issued by lawmaker Naveed Qamar who is a chairman of the parliamentary committee.

The lawmaker expressed dissatisfaction over the increasing taxes on mobile phones, arguing that government institutions have wrongly classified them as luxury items.

Naveed Qamar asked the FBR and the Tax Policy Office to review the existing tax rates on mobile phone imports, especially those brought in under personal baggage or registration schemes.

He said that the report should be completed by March 2026 so it can be evaluated before the next budget.

MNA Qasim Gilani criticised the high taxes, pointing out that consumers are forced to pay the same taxes again if their phones are lost or stolen. He noted that smartphones are already very expensive, even an old iPhone 6 incurs a tax of Rs35,000, while an iPhone 12 can come with taxes as high as Rs100,000. He added that smartphones are tools for content creation, video sharing, and e-commerce, and have become sources of income for many.

MNA Sharmila Faruqi said that a new iPhone now costs around Rs350,000, and buyers must pay an additional Rs190,000 in taxes. FBR officials responded that taxes are based on the device’s value, not on specific models.

Another committee member, Mirza Ikhtiar Baig, stressed that a clear and transparent tax mechanism is needed and rejected the idea that smartphones are only meant for wealthy people.

The PTA chairman said the committee that only 6 per cent of high-end phones are imported, with most devices now being manufactured locally. He also said that 5G licences are expected to be issued by February or March next year.