Smartphone regulatory duty removal recommended by NA Finance Committee

The National Assembly Standing Committee on Finance and Revenue recommended removing regulatory duty on smartphones after members

Islamabad: The National Assembly Standing Committee on Finance and Revenue recommended removing regulatory duty on smartphones after members expressed serious concern that high taxes on mobile phones make digital access difficult for ordinary citizens and could damage the government’s Digital Pakistan agenda.

The most important issue discussed in the meeting was the burden of taxes on smartphones. Members said mobile phones are no longer luxury items because students, freelancers, online workers, small businesses and ordinary citizens now use them for education, banking, e commerce, employment, e governance and daily communication.

The committee, chaired by Syed Naveed Qamar, reviewed the taxation structure on imported and locally available mobile phones. Members strongly objected to additional taxes on selected smartphone brands and raised concern over the existing tax system on imported smartphones.

According to the briefing given to the committee, phones valued up to 30 dollars face a tax rate of 25 percent. Phones valued between 31 dollars and 100 dollars face a tax rate of 36 percent. Imported phones valued between 101 dollars and 200 dollars face a tax rate of 40 percent.

The committee was further informed that phones valued between 201 dollars and 350 dollars carry an effective tax rate of 38 percent, while smartphones valued between 351 dollars and 500 dollars face a tax rate of 40 percent. Phones valued above 500 dollars carry an effective tax rate of 41 percent.

Officials told the committee that as the price of a mobile phone increases, the tax burden also increases. The briefing said tax per unit can rise from Rs1,500 to Rs141,500 depending on the phone’s category.

The committee was also informed that 44 percent of imported phones fall in the 31 dollars to 100 dollars category, which is considered a lower-tax category. However, across all imported phone categories, the average effective tax rate stands at 39.6 percent.

Members said such high taxes make smartphones expensive for the public and push many users away from the formal market. They also pointed out that millions of non PTA mobile phones are already present in the market.

Committee members said the Federal Board of Revenue had earlier assured parliamentary committees that taxes would be removed or reduced in the budget, but that assurance was not fully implemented. Members expressed concern that relief was not given despite repeated discussions before the budget.

Ali Qasim Gilani said he had been pursuing the case of regulatory duty on mobile phones for the last six months. He said both parliamentary committees had been given assurances, yet taxes were not removed. He added that consumers and business circles were disappointed because relief on mobile phone taxes and duties was not provided despite commitments before the budget.

He said smartphones must be made affordable for the people, and for this, taxes need to be reduced. He warned that if taxes remain at the current level, the government’s Digital Pakistan agenda will be affected.

After detailed review, the committee recommended removing the regulatory duty on smartphones. It also advised rationalizing taxes, especially on entry-level and mid-range smartphones, to promote digital inclusion, support the formal market, improve compliance and aid economic growth.

Members also suggested introducing an installment system for paying mobile phone taxes. They said small items are sold on installments across the world, and a similar system can help users register phones legally instead of keeping non-PTA phones. The chairman directed that the Federal Board of Revenue to work with the Pakistan Telecommunication Authority and present a plan for installments.

The committee also discussed challenges in the aviation sector. Members observed that while proposed fiscal concessions for Pakistan International Airlines were intended to support the national carrier, other domestic airlines are also facing financial and operational difficulties.

The committee said government support should not appear to favour one airline only. It recommended that the government adopt a sector-neutral approach by extending equivalent fiscal concessions and incentives to all eligible airline operators from July 1, 2027, to ensure a level playing field in the aviation industry.

Syed Naveed Qamar said fiscal policy should remain fair, transparent and free from any perception of preferential treatment. He said support should be based on objective policy and applied equally across the sector. He added that a balanced and sector-neutral framework would improve competition and help build a stronger, more resilient and efficient aviation industry.

The committee also approved key amendments to the Finance Bill, 2026, after completing a clause by clause review. These amendments aim to strengthen transparency, protect taxpayers’ rights, improve accountability, and make tax laws easier to implement.

One important legal safeguard approved by the committee relates to freezing orders against property held by a third party. Under the amendment, no freezing order can be issued unless the Special Judge records written reasons and gives the affected person a chance to be heard. However, immediate action may still be allowed where there is a risk that assets may be moved or hidden.

The committee also approved amendments allowing the Independent Case Scrutiny Committee to co opt a Chartered Accountant as a non voting member in technically complex matters. It also endorsed provisions excluding the approval period when calculating statutory limitation and removed redundant sub clauses to improve clarity in the law.

The committee held an in-depth discussion on the proposed taxation mechanism for the steel sector. Government representatives informed members that electricity consumption benchmarks of 700 units per metric ton for steel melting and 110 units per metric ton for steel re-rolling are written in law and linked with data published by the Pakistan Bureau of Statistics.

Officials said this would reduce administrative discretion. However, members asked for detailed clarification about electricity consumption benchmarks and taxpayer compliance ratios to ensure that the method is scientific, objective and applied consistently.

During the meeting, Syed Naveed Qamar said legislation should not be rushed. He said that between speed and accuracy, he would always prefer accuracy. He stressed that the committee must not hurry through lawmaking at the cost of precision and sound legislation.

Members also warned against last minute amendments without proper technical review and parliamentary scrutiny. They said hurried changes can weaken the quality of law, create legal confusion and cause problems during implementation.

Over the course of its meetings, the committee received detailed briefings from the Federal Board of Revenue, Ministry of Finance, National Tariff Commission, Ministry of Industries, Ministry of Commerce and other relevant stakeholders.

The committee reviewed proposals related to income tax, sales tax, customs, federal excise, tariff reforms, petroleum levy, digital taxation, banking data sharing, tax administration, compliance mechanisms and sector-specific fiscal incentives.

Members examined the proposals by looking at their economic impact, practical implementation, effect on taxpayers’ rights, transparency and possible consequences for consumers, businesses, exporters and Pakistan’s investment climate.

Syed Naveed Qamar said fiscal policy must balance revenue generation with sustainable economic growth. He said broadening the tax base should be preferred over increasing the burden on people and businesses already paying taxes.

He also stressed the need to protect taxpayer privacy, ensure transparency in enforcement and promote a predictable, fair and business-friendly tax system. He said tax reforms should improve industrial competitiveness, protect vulnerable groups and support long-term economic development.

The committee recommended phased implementation of major tax reforms, stronger institutional oversight, improved accountability, better protection for consumers, more efficient administration and strong implementation systems.

The committee concluded its review of the Finance Bill, 2026, by reaffirming its commitment to fairness, transparency, fiscal responsibility and good governance. It said a balanced Finance Bill is necessary to protect taxpayers’ rights, build public confidence in the tax system, promote sustainable growth and support Pakistan’s long-term economic stability.

Dr. Sharmila Faruqui submitted a note of dissent on the electric vehicle policy, while Muhammad Javed Hanif submitted a note of dissent on the existing taxation structure on imported mobile phones.