NA Panel Calls for Review of Mobile Phone Taxes to Enhance Affordability

ISLAMABAD: A National Assembly committee on Thursday raised concerns over the tax burden on mobile phones and asked the Tax Policy Office in the Ministry of Finance to provide a detailed report on the current taxation framework for imported as well as locally manufactured handsets.
The National Assembly Standing Committee on Finance, chaired by MNA Naveed Qamar, examined the issue after a briefing by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial. Following the presentation, the committee recommended that taxes on mobile phones be reduced.
The panel also directed authorities to submit a written note explaining the basis of the existing tax regime, its revenue impact and the policy objectives behind it. During the discussion, Mr Qamar said the income tax imposed on mobile phones was in effect being treated like a sales tax and asked for the practice to be reviewed.
He also sought a detailed report on the tax treatment of phones imported or brought in under the Completely Built Unit (CBU), Completely Knocked Down (CKD) and Semi Knocked Down (SKD) categories.
Members of the committee were told that imported mobile phones priced above $500 face a total tax burden of about Rs76,000, which amounts to an effective tax rate of around 54pc. Handsets in the $700-$750 bracket were said to face a slightly higher tax incidence of nearly 55pc.
FBR officials informed the committee that imported mobile phones were taxed at roughly 54pc of their value, while locally manufactured or assembled devices were subject to a lower rate of about 25pc. The briefing said mobile phones are subject to 18pc general sales tax (GST), in addition to concessional income tax and a withholding tax of around Rs11,500 on higher-end devices.
According to the officials, there was currently no room to cut GST or withholding tax rates. However, tax authorities told the committee that the matter would be reviewed during the upcoming fiscal year’s budget process.
Mr Qamar said access to modern technology needed to be encouraged because it was important for economic growth. He said the additional income tax on mobile phones was unjustified when sales tax was already being collected.
The committee recommended that the taxation structure be revisited to promote fairness, make mobile phones more affordable and support local manufacturing. It also asked for an assessment of exemptions available under the Income Tax Ordinance, 2001, and the Baggage Rules, 2006.
Members were also informed that statutory exemptions exist for mobile phones imported by visually impaired persons and for devices brought in under personal baggage rules. The applicable ad valorem sales tax rates were said to range from 18pc to 25pc depending on the value and classification of the devices.
Separately, the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, received a briefing from the State Bank of Pakistan on SMS alert charges in the banking sector.
The committee expressed displeasure over the failure of telecom companies to provide data. The chairman of the Pakistan Telecommunication Authority told the panel that banks use bulk SMS services through aggregators, which increases the cost per message. Members were informed that customers receive an average of around 15 SMS alerts each month.
Mr Mandviwalla directed banks and telecom companies to submit detailed information on SMS costs and revenue generation, and asked the PTA to prepare a comprehensive solution in consultation with stakeholders.
The Senate panel also reviewed a request for government support to promote PayPak. The minister of state for finance told the committee that the government was moving ahead with QR-based payment systems to encourage cashless transactions. Members were informed that PayPak usage had risen significantly and that it was being co-badged with international systems such as Visa.
The committee welcomed the progress and stressed the need to further promote PayPak in order to reduce dependence on international payment networks and limit foreign exchange outflows.
The issue of asset declarations by government servants also came under discussion, with the committee expressing concern over the FBR’s failure to implement the relevant laws. Senator Sherry Rehman described the lack of seriousness as a gross violation of the law.
The committee chairman directed the minister of state to coordinate with the Establishment Division and the FBR to address the issue and report back at the next meeting.
In addition, the National Assembly panel recommended, with amendments, the passage of the Special Economic Zones Amendment Act, 2026, the Parliamentary Budget Office Bill, 2025, and the Export-Import Bank of Pakistan Amendment Bill, 2026. The Senate committee also unanimously recommended the Corporate Social Responsibility Bill, 2026, for passage with amendments, including a requirement to make disclosure of CSR activities mandatory.