Tax on Imported Mobile Phones in Pakistan Expected to Increase in Budget 2024-25

Pakistan is contemplating raising taxes on imported mobile phones as part of its federal budget for the fiscal year 2024-25. Sources within the Federal Board of Revenue (FBR) disclosed this information, indicating a potential increase in the Pakistan Telecommunication Authority (PTA) cess, Federal Excise Duty, and Goods and Services Tax (GST) on imported cell phones.

Despite proposals for additional GST, challenges arise due to the existing 25% GST structure. With the coalition government set to unveil fiscal targets in the budget presentation, analysts speculate a budget aimed at strengthening Pakistan’s position for a new bailout deal with the International Monetary Fund (IMF).

Pakistan’s economic landscape remains fragile, with talks ongoing for a loan estimated between $6 billion to $8 billion from the IMF to prevent economic default. Last year, Pakistan narrowly avoided default, thanks to a short-term IMF bailout of $3 billion. However, this came with sacrifices, including a significant drop in growth and industrial activity, coupled with high inflation rates.

Looking ahead, the growth target for the upcoming fiscal year is anticipated to rise to 3.6%, compared to 2% this year. Prime Minister Shehbaz Sharif has voiced a commitment to reforms since his election, yet challenges persist with soaring prices, unemployment, and limited job opportunities.

In preparation for future economic endeavors, the federal government has devised a comprehensive five-year plan spanning from 2024 to 2029. This plan encompasses various sectors including macroeconomic framework, energy, balance of payments, development budget, agriculture, population, poverty, and governance reforms. Approval for the five-year plan is expected in the upcoming budget, signaling a proactive approach towards addressing Pakistan’s economic challenges.