LAHROE - The Federal Board of Revenue (FBR), running short of annual collection target of Rs2.381 trillion, will now be able to generate at least Rs5 billion per annum, as the Board has raised sales tax on smart phones at the import stage, now targeting cell phone users in its move to increase declining tax revenues, official sources said on Saturday.
However, the importers and dealers of cell phones , opposing the decision, demanded of the government to immediately withdraw SRO 280(I) 2013 as it would not only destroy the mobile phone businesses but would also promote smuggling and encourage undocumented sector.  Tax officials said that the decision came at a time when tax authorities are facing serious problems in meeting the annual collection target and the move is expected to help curbing increasing imports of luxury items, aimed at reducing the import bill due to declining foreign exchange reserves.
The officials said that Federal Board of Revenue increased sales tax from Rs250 per set to Rs1000 per set on smart cellular phones or satellite phones and Rs250 per set to Rs500 per set on other mobile phones . In this regard, the FBR has issued SRO.280(I)/2013 in line with the latest IT technology of cellular/mobile phones industry.
According to the notification, the fixed amount of sales tax would now be collected at import stage, and would not be collected at the time of activation of mobile phone as specified in the rescinded SRO.542(I)/2008. The FBR will collect sales tax of Rs1000 per cellular mobile phone in case of smart phones or satellite phones ,
Earlier, the FBR was charging nominal sales tax at the activation stage, a practice that was abandoned years ago as no one goes to cellular companies to activate phones . Now tax calculation will be made at the import stage, which will help recover dues.
Tax officials said that Pakistan is a big market for all types of smart phones , and the country spends millions of dollars per annum on import of cellular phones , particularly smart phones . The officials added that similar measures are also expected in the coming months, aimed at boosting revenue collection.
The LCCI Vice President Mian Abuzar Shad protesting the imposition Rs1000 in sales tax on smart phones , said that the Caretaker Prime Minister should take a serious notice of issuance of anti-business SROs at a time when the economy was already facing multiple internal and external challenges.
He said that instead of focusing on expansion of tax net by bringing the untaxed sectors into the tax net, the FBR is squeezing the existing tax payers but all such moves aimed at tarnishing the image of the government would be resisted tooth and nail.
He said that it would have been wiser on the part of the FBR if it had given at least one month time to the mobile dealers for clearance of their shipments instead of slapping this harsh measure with one stroke of pen.