Mobile phone use is going to be costlier while locally made mobile phone sets will likely be cheaper in fiscal year 2020-21, according to the proposed national budget placed in parliament on Thursday.
The government has proposed a 5.0 per cent hike in the supplementary duty on mobile phone services -- voice and data -- which will raise the cost of mobile phone use.
"The supplementary duty has been proposed at 15 per cent from the existing 10 per cent on services provided through mobile phone SIM/RIM cards," Finance Minister AHM Mustafa Kamal said in his budget speech.
Currently, in addition to the supplementary duty (SD), mobile users pay 15 per cent value added tax (VAT) and 1.0 per cent surcharge on talk-time and messaging services, while the VAT on mobile Internet use is 5.0 per cent.
The government first imposed a 3.0 per cent SD on voice, Internet, SMS and other mobile phone services in FY '16, which was increased to 5.0 per cent in FY '17 and to 10 per cent in FY '20.
However, locally made cellular phone is going to be cheaper as the new budget proposed rationalising the existing import tax concessions.
"To encourage cellular phone manufacturing and further strengthen the industry, I propose to rationalise the existing import tax concessions and make it more investment-friendly," said the finance minister.
"In addition, to protect the local industry, it has been proposed to set the minimum assessable value of cellular phones at the import stage to ensure proper valuation and just revenue," he added.
Local manufacturers currently enjoy VAT exemption on the manufacturing of mobile phone sets, while the current VAT rate for mobile phone set assembling is 5.0 per cent.
"To encourage expansion of this sector, I propose to extend this facility for one more year," said the minister.
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