Mobile handsets are getting costlier as the government has decided to impose a value-added tax (VAT) of up to 7.5 per cent on locally manufactured and assembled mobile phones, based on their status.
The national budget for the 2023-24 fiscal year has also proposed an increase in import duties for handset raw materials.
Under the surface mount technology (SMT) assembly process, as well as for assembling companies, the VAT rate will increase from 5 per cent to 7.5 per cent from June 1 of this year.
Similarly, companies that have power circuit board (PCB) assembly facilities, SMT assembly processes, battery charger assembly facilities and general assembling facilities will pay a VAT rate of 5 per cent, up from the current 3 per cent.
Moreover, companies that have additional facilities for power circuit board (PCB) assembly and mobile housing manufacturing will now be subject to a VAT rate of 2 per cent, compared to the previous zero rates.
"I propose to extend the notification period till June 30, 2024, for mobile phone manufacturers/assemblers by imposing a 2 per cent VAT instead of zero per cent, 5 per cent instead of 3 per cent, and 7.5 per cent instead of 5 per cent respectively at the local stage," said Finance Minister AHM Mustafa Kamal in his budget speech.
The budget also proposed to rationalise certain conditions mentioned in the notification and introduce new conditions.
The finance minister said that the government will ease some clauses to allow the import of raw materials and micro-parts under the current tax break facility.
However, the government proposed to extend the existing VAT exemption facility for the production of electronic equipment, including computers, laptops, desktops, notebooks, notepads, tablets, servers, keyboards, mouses, RAM, PCBA or motherboards, mobile phone chargers and batteries, power banks, routers, network switches, modems, network devices or hubs, speakers, sound systems, and earphones, until June 30, 2026.
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