In the recent news, a new sales tax structure is to be imposed on imported smartphones in the upcoming Finance Bill. The higher tax rates are to include a 17 percent sales tax on cell phones retaining a value of USD 200 or above. Top officeholders in the Ministry of Finance declared that under the proposition, the fixed amount of sales tax would be substituted with the standard rate of 17 percent sales tax on certain varieties of imported smartphones.
The New Tax Rates Are to be Sanctioned by the National Assembly
Furthermore, the policy including the higher tax rates has been integrated in the Supplementary Finance Bill 2021, which is to be endorsed by the National Assembly. In this respect, imported smartphones have been divided into two more general categories.
The first class would cover those mobile phones having import value up to USD 200-250. The second category would include cellphones with a value of above USD 200-250. The sales tax table would be revised under the Sales Tax Act 1990 in the Finance Bill by placing all kinds of phones in two categories based on their import value in completely built condition (CBU), semi-knocked down (SKD), or completely knocked down (CKD) condition.
Tax Charged on Imported Smartphones Are According to their Import Value
Currently, smartphones are divided into seven classifications. These cellular mobile phones or satellite phones are charged based on import value per set, or equal value in rupees in case of supply by the manufacturer, at the rate as suggested against each category as per Ninth Schedule to the Sales Tax Act 1990.
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According to the Finance Bill, sales tax is levied on the imported smartphones in the CBU condition at the time of import or registration (IMEI number by CMOs). Sales tax is charged on the imported smartphones in CKD/SKD condition, and sales tax is charged on the supply of locally produced mobile phones in CBU condition.
Furthermore, sales tax is charged at Rs. 10-130 to Rs. 9,270 per phone, counting on the value of the imported smartphones. For instance, Rs. 1,680 fixed amounts of sales tax are applicable on the import of mobile phones (CBU condition), where value is surpassing USD 100 but not exceeding USD 200.
Source: Pro Pakistani