Budget 2024-25: Tax increase proposed on imported mobile phones

A proposal has been made to increase the tax on imported mobile phones in the federal budget for the next financial year 2024-25.

A day before the laying out of the budget, sources within the Federal Board of Revenue (FBR) said it had also been proposed that the Pakistan Telecommunication Authority (PTA) cess and Federal Excise Duty should also be enhanced on the imported cell phones.

“Apart from this, an increase in the GST on import of mobile phones too has been proposed in the finance bill,” the sources said.

However, they said, imposition of additional GST was difficult because of already imposed 25% GST.

The coalition government is expected to lay out fiscal targets in the budget on Wednesday. The analysts believe that the government would like to present such a budget that will help strengthen Pakistan’s case for a new bailout deal with the International Monetary Fund (IMF).

Pakistan is in talks with the IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a default for its economy.

Pakistan narrowly averted a default last summer thanks to a short-term IMF bailout of $3 billion over nine months.

While its fiscal and external deficits have been brought under control, it came at the expense of a sharp drop in growth and industrial activity as well as high inflation, which averaged close to 30% in the last financial year and 24.52% over the last 11 months.

The growth target for the upcoming year is expected to be higher at 3.6% compared to 2% this year and economic contraction last year.

Prime Minister Shehbaz Sharif has expressed public commitment to tough reforms since being elected in February elections, but high prices, unemployment and a lack of new job opportunities have piled political pressure on his coalition government.

According to sources, the federal government has prepared a five-year (2024-2029) plan for determining important economic goals. Macroeconomic framework has been made part of the plan. The federal government has decided to approve the five-year plan in the budget of next financial year. Under the five-year plan, important economic goals will be determined, The News reported on Monday.

The sources told the publication that macroeconomic framework, energy, balance of payments, development budget, food and agriculture, population, poverty and governance reforms are part of the plan.