Millions of Pakistanis are currently using handsets which the government has not approved yet. However, there is now a proposal by the parliamentary panel to make it easier for the FBR to collect that particular tax.
Pakistani taxmen have just been issued explicit orders from parliament. In its resolution, the Standing Committee on Finance and Revenue of the National Assembly has ordered the FBR to provide an installment scheme of PTA tax on smartphones instead of insisting upon the payment of the entire tax amount prior to registering the handset.
This directive addresses the extent of non-compliance that is indicated by committee members. Lawmakers argued that many phones without PTA approval were already circulating and actually in use in the country, indicating that the existing system of up-front payment is leading consumers towards informal use of their phones.
Why Lawmakers Prefer Installment to Lump Sum Payments
The reason for the installment payment of PTA tax is quite clear. Members of the committee explained that demanding full tax amount to be paid at once becomes an actual financial obstacle, especially when buyers pay for less expensive smartphones for which taxes make up a considerable portion of their cost.
Making use of installments will allow the owners to distribute this cost among several smaller payments instead of paying for it once. This is relevant to a nation where affordability is a factor that has determined people’s ability to get access to mobile banking services.
Syed Naveed Qamar Aligns FBR and PTA
The committee chairman, Syed Naveed Qamar, directed the FBR to coordinate directly with PTA in order to come up with a practical plan for making the installment payments work. This installment based taxation plan by PTA cannot be implemented without the cooperation of both entities, since registration is at PTA’s end and the collection will remain with the FBR.
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An Even Larger Question Raised by Lawmakers
A number of lawmakers took this opportunity to ask whether smartphone taxes are being imposed for generating revenue, or if they are being used to shield domestic manufactures from competition by foreign companies. This is significant in the sense that a tax driven by revenue generation would be applied equally, whereas a tax driven by protectionism would specifically be imposed on imports.
FBR Defends Smartphone Tax, Finance Secretary Sends Warning
The FBR reiterated that tax on smartphones continues to be a significant revenue stream for the government. There is actually a conflict here, since better paying conditions could lead to higher revenue generation in the long run, but this is a concern of the finance department.
Finance Secretary put it into context by saying that reduction in tax on cheaper handsets would result in revenue losses amounting to Rs 1 billion, a number that gives shape and context to the whole issue in fiscal terms.
What Lies Ahead?
The installment scheme for tax payments by the PTA is in the process of being implemented, with many issues remaining to be addressed, such as the method for recording partial payments, the registration status of the firm during the period of repayment, and the synchronizing of records. The larger issue of whether mobile taxation is done for revenue purposes or protecting an industry will not likely be settled any time soon.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
