THE Government Thursday announced a relief package for telecom sector envisaging status of industry for the sector, cut in advance income tax on mobile phone users from 12.5% to 10%, which will be further reduced to 8% in 2022-23, federal excise duty will be brought down from 17% to 16%, abolition of Rs250 on SIM card and reduction of services tax on telecommunication companies from 8% to 3%.
The global telecom sector has advanced rapidly over the last two decades due to technological advancements, growing use of smart phones and large-scale use of data services.
The sector also made rapid advances in Pakistan as well due to trade and investment liberalization, favourable policies and healthy competition.
The sector is contributing handsomely to national exchequer by way of taxes and to the GDP but it has been felt over the last few years that its further expansion and growth is inhibited by undue taxation both by the federal and provincial governments.
The situation became so precarious that even the Supreme Court had to take notice of the issue but that intervention too proved to be transitory.
In this backdrop, one must give credit to Federal Minister for Information Technology and Telecommunication Syed Aminul Haq for securing a worthwhile package for the industry.
It augurs well that the Government has approved the introduction of a simple and easy tax system and exemption of the telecom sector from all withholding taxes and complex collections, which could lead to more investment and relief to customers.
The cabinet has approved reduction of 4% customs duty and 9% regulatory duty on import of telecommunication equipment.
Further instructions have been issued to the FBR to reduce taxes from 20% and 7% to 5% and 3%, respectively, on raw material of the optical fibre cable manufacturing industry.
Though there will be delayed implementation of the measures contained in the package (from the new financial year) but this time period can be utilized to discuss all aspects of the plan to improve it further as per demands of the sector and its users.
We would particularly point out towards double taxation (by Federal and Punjab Governments) as a result of which telecom services are cheaper in Islamabad as compared to neighbouring Rawalpindi which falls in Punjab.