Here’s What Happened After Finance Committee’s Heated Arguments on Ending PTA Tax

The National Assembly’s Standing Committee on Finance, chaired by Syed Naveed Qamar, held a meeting on Tuesday in which members unanimously demanded a reduction in taxes on mobile phones. Naveed Qamar said the Federal Board of Revenue (FBR) is imposing excessive taxes on mobile phones after already increasing taxes on vehicles. He questioned whether owning a car or a mobile phone had become a crime in Pakistan. Committee members stressed that mobile phones are no longer luxury items but essential for everyone. FBR officials admitted that taxes on high-end smartphones can reach up to 55 percent. These include devices that compete with iPhones and other premium brands. The officials said Rs. 82 billion in taxes were collected from mobile phones last fiscal year, of which Rs. 18 billion came from smartphone sales. Committee member Sharmila Faruqi told the meeting she bought a phone for Rs. 370,000 but had to pay Rs. 190,000 in tax. “With tax added, the phone costs more than Rs. 550,000 or Rs. 600,000. Don’t charge so much tax that it becomes unbearable,” she said, adding that taxes on some phones reach 60 percent. FBR Chairman said the board is ready to present a complete analytical report on mobile phone taxation. PTA Chairman added that 94 percent of mobile phones in Pakistan are assembled locally, and only six percent of expensive imported phones are being targeted for higher taxes. He said Pakistan is expected to shift to 5G after a spectrum auction planned by February. The PTA Chairman also stated that he personally paid Rs. 100,000 in mobile phone tax. Naveed Qamar said policymakers must consider not only tax revenue but also the broader economic impact. The committee requested a detailed report on mobile phone taxes by mid-March and agreed to review the issue before the next budget. Hina Rabbani Khar, Ali Qasim Gilani, and several other members also recommended tax reductions. FBR officials informed the panel that overseas Pakistanis can use duty-free mobile phones for up to 60 days upon arrival. Gilani complained that even old phones such as the iPhone 6 are taxed at Rs. 35,000, while an iPhone 12 Pro is taxed at Rs. 160,000. He said high taxes push people toward using non-PTA phones and discourage freelancers. He noted that some phones carry taxes as high as Rs. 900,000. Members argued that lowering tax rates will increase the number of tax filers and boost device registration. They also said FBR’s valuation of phones is higher than market prices, which the FBR Chairman promised to review. PTA officials said only six percent of expensive phones are imported and that almost all other smartphone brands, except Apple, are now assembled in Pakistan. The PTA Chairman said the 5G license will likely be issued in February or March next year. Committee members also raised concerns that consumers must pay tax again if their phone is stolen. They said smartphones are already too expensive and out of reach for many people. Naveed Qamar said smartphones are no longer luxury items but essential tools, and the argument that “we are under an IMF program” can no longer justify high taxes. FBR officials clarified that tax is applied based on the price of the phone, not the model.