英语论文网

year.

The sector has been overburdened with taxes by contributing over 31% of its revenue through GST and Withholding Tax. Resultantly little space has been left to spend on infrastructure expansion. Following major tax measures were introduced in the budget for the fiscal year 2008-09:

1. GST/FED rate was revised from 15% to 21% for telecom sector while this raise was only 16% for rest of the economy

2. Import duty on mobile handsets was imposed @ Rs. 750 per mobile hand set (Rs. 500 custom duty and Rs. 250 Regulatory duty)

3. Activation Tax on cellular Mobile Sector continued @ Rs. 500/ per new connection

The enhancement in taxes along with economic slowdown had an adverse impact on telecom sector. PTA took cognizance of the situation and suggested to the tax authorities and the Prime Minister that Government of Pakistan should reduce taxes on the sector. Particularly it was emphasized that FED/GST that was raised from 15% to 21% for telecom sector needs to be reduced and take par with rest of the economy i.e., 16%. Further it was apprised to the Government of Pakistan that imposition of Rs. 750 tax on import of mobile handsets has increased the mobile acquisition cost in Pakistan which needs to be reduced. Further it was suggested that Activation Tax @ Rs. 500, which is liable on every new connection, is a hurdle in the growth of the mobile sector and it should be abolished.

PTA's efforts, however, proved fruitful, as the Government provided the following relief in taxes to the operators in the budget 2009-10:

1. GST /FED rate on telecom sector was brought down from 21% to 19.5%

2. Activation Tax rate was reduced from Rs. 500 to Rs. 250 per new connection

3. Custom duty on import of Mobile handset was decreased from Rs. 500 to Rs. 250 per set while the Regulatory duty on import of handsets @ Rs. 250 was withdrawn

4. Initially Rs. 0.20 tax per SMS was proposed, however it was later on abolished.

The tax measures introduced in this budget were welcomed by the regulator as well as the operators as they would have far reaching impact on the sector. The FBR is expected to collect extra revenue from the sector during 2009-10.

GST is one of the main taxes collected from the telecom sector and cellular mobile leads in paying this tax, contributing nearly 82% of the total GST annually. The sector has contributed over Rs. 49 billion as GST in fiscal year 2008-09, which is 11% higher than the previous year. However, the rate of growth of FED/GST collection from telecom sector declined in 2008-09 compared to previous years due to high rates.

There was only 9% increase in FED/GST collection from cellular mobile sector in 2008-09 compared to 30% growth of last year and 50% growth in the previous year. Keeping view the difficulties being faced by the sector, the government has reduced the GST/FED rate from 21% to 19.5%, besides providing relief to cellular mobile operators in Activation Tax by 50% i.e. from Rs. 500 to Rs. 250 per new connection. This will certainly enable the sector to contribute more to GST collection in the next year.

Telecom Imports

The rising trade deficit (US$ 12 billion) and depleting Foreign Exchange Reserves forced the Government to take prudent measures to improve the Foreign Exchange