Karachi, April 18, 2025 – The Federal Board of Revenue (FBR) has revealed that locally manufactured mobile phones benefited from a massive sales tax exemption totaling Rs33 billion in 2024, according to its latest tax expenditure report.
This significant exemption was granted under the Ninth Schedule of the Sales Tax Act, 1990, allowing manufacturers of mobile phones to supply their products without incurring standard sales tax liabilities. The move, initially aimed at supporting Pakistan’s local mobile assembly industry, has become one of the most substantial tax breaks within the technology sector.
According to the FBR, these exemptions applied to the supply of mobile phones in Completely Built Unit (CBU) condition within the country, in addition to concessions already applied on imported devices in Completely Knocked Down (CKD) or Semi-Knocked Down (SKD) forms. These arrangements have been instrumental in promoting local assembly while keeping prices of phones relatively accessible for consumers.
The exemption also extends to imported or locally supplied phones, including cellular and satellite variants, categorized according to their import value. These devices are taxed or exempted based on price brackets:
• Phones priced above US$500 are taxed based on the full import value or its rupee equivalent.
• Devices priced between US$350 and US$500 fall into a lower tax bracket.
• Phones valued between US$200 and US$350 receive additional exemption considerations.
• Mobile handsets between US$100 and US$200 also qualify for reduced tax rates.
• The lowest bracket includes phones priced between US$30 and US$100, many of which benefit from near-total exemption.
While these tax concessions were introduced to encourage investment in the local mobile manufacturing industry and reduce import dependency, they have come under scrutiny for the scale of revenue loss involved.
Tax analysts suggest a review of these policies might be necessary to strike a balance between industrial incentives and national revenue objectives. With mobile penetration in Pakistan rapidly expanding, the Rs33 billion in sales tax exemption sparks an important debate on sustainable fiscal planning and the future of mobile technology development in the country.