18 Percent GST Imposed, Budget 2024 Makes Affordable Mobile Phones Expensive

Budget 2024: The recent budget introduced by the Pakistan Muslim League-Nawaz (PML-N) government has begun to reveal its effects gradually. While the budget presentation included a whirlwind of figures and promises, the real impact only becomes apparent when government departments start implementing the measures.

One significant change highlighted in the budget documents and reported by Pakistan’s media was the imposition of an 18% General Sales Tax (GST) on the sale of new mobile phones. However, consumers were initially unaware of the actual financial burden this would impose on them.

Consumer Reactions

In Lahore, one of the largest markets for buying and selling mobile phones, scenes of arguments between customers and shopkeepers have become more common. This is due to the implementation of the 18% GST starting this week.

Muhammad Farooq, a resident of Lahore, came to Hafeez Center to buy a new mobile phone but left without purchasing one. Speaking to Urdu News, he said, “I had to buy a mobile phone. I checked its price earlier and gathered the money. Today, I came to buy it, and the same mobile phone that was priced at 63,000 rupees is now being sold for 72,000 rupees. The price has increased by 9,000 rupees. I had difficulty arranging the earlier amount, so I am not buying it now. Let’s see what I can do. I will probably buy a used phone.”

Muhammad Farooq is not alone in expressing his grievances about the price hike of mobile phones this week. Many other individuals intending to purchase mobile phones are facing similar issues.

Sidra Ishaq, also from Lahore, saw the price of the mobile phone she wanted increase by 36,000 rupees. She said, “I wanted to buy an Android phone that was priced at 205,000 rupees. Today, they are saying it is 243,000 rupees. This is outright injustice. The shopkeepers are saying that a new tax has been imposed. Ask the government.”

Market Impact

It’s not just the customers who are unhappy with the new tax. Traders in the mobile phone market are also displeased with this decision. Hamza Butt, who has been in this business for the past 10 years, shared his concerns. “People’s purchasing power had already diminished due to electricity bills. Just step out into the market to understand how business is doing. The mobile phone market has been hit the hardest over the past few years. Initially, PTA imposed a tax, making imported phones unaffordable, and now the local phones are taxed as well. This system cannot sustain for long.”

New Prices After 18% GST

If we examine the mobile phone market, the prices after the 18% General Sales Tax imposed in the budget are as follows:

A phone worth 25,000 rupees is now 4,000 rupees more expensive, bringing the new price to 29,000 rupees.
A phone priced at 50,000 rupees now has an additional 9,000 rupees tax, making the new price 59,000 rupees.
For a phone worth 100,000 rupees, the GST is 18,000 rupees, and the new price is 118,000 rupees.
For a phone priced at 150,000 rupees, the tax is 27,000 rupees, bringing the new price to 178,000 rupees.
A phone worth 200,000 rupees now costs 238,000 rupees.

Interestingly, due to a record decline in the purchase of imported mobile phones, the government had reduced duties on them in recent months, resulting in a decrease of up to 30,000 rupees on imported phones. However, the new tax has once again changed the situation.

Wider Impact of New Taxes

The new taxes imposed in the budget have not only affected the mobile phone market. The Flour Mills Association has also gone on strike, and there is an uproar among traders regarding the direct retail tax. In the coming days, it will become clear how easily the government can collect the new taxes introduced in the budget.

In conclusion, the implementation of the 18% GST on mobile phones has significantly impacted their affordability, leading to increased prices and consumer frustration. The broader economic implications of the new budget taxes are also beginning to surface, indicating potential challenges for both consumers and traders.

TNN Pakistan