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Smartphone won’t come cheap now

June 14, 2019 00:00:00


FE Report

Smartphone usage is likely to be costlier as finance minister AHM Mustafa Kamal proposed 10 per cent supplementary duty (SD) from existing 5.0 per cent.

This budgetary measure is likely to take effect from the upcoming fiscal year, 2019-20.

Mr Kamal also proposed a further 15-per cent rise in tax on imported smartphones alongside existing 10 per cent, totalling 25 per cent.

With the new SD of 5.0 per cent, customers will have to pay a total of 27.77 per cent tax of the services provided through mobile phones.

Currently, mobile users have to bear 15 per cent VAT, 5.0 per cent SD and 1.0 percent surcharge on their bills for phone calls, internet and other usage.

And now the SD rate is going up to 10 per cent, according to the budget speech.

Mr Kamal also proposed to raise minimum tax for mobile companies to 2.0 per cent of their turnover from 0.75 per cent.

On import tax rise on handsets, he said, "As smartphone is used by affluent people, I propose to increase customs duty of smartphone to 25 percent."

However, customs duty on feature phone will remain unchanged as it is used by relatively poor people, the minister disclosed.

He said some (five to six) local manufacturers have started making and assembling cellphones for previously imposing import tax on smartphone handsets.

Currently, there are 10 per cent customs duty, 15 per cent VAT, 2.0 per cent advance income tax and another 1.0 per cent surcharge on imported handsets.

The minister also proposed to impose VAT at import stage on telecom equipment as they have been enjoying exemptions for a long time.

Base stations, machines for reception, conversion and transmission or regeneration of voice, images or other data, transmitting/receiving apparatus and telephonic/telegraphic switching apparatus will come under VAT regime.

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