Increase in RD may fetch Rs4.4bn

RECORDER REPORT

ISLAMABAD: The government has decided to increase Regulatory Duty (RD) on import of cellular phone valuing $60 and above of any brands through the Finance Supplementary (Amendment) Bill, 2018 with estimated collection of Rs 4.4 billion from this measure during 2018-19.

At the end of the Senate Standing Committee on Finance, senior officials informed media Wednesday that the government has proposed increase in the rate of RD within the range of 10 to 20 percent on import of expensive mobile phones. On cheap mobile phones, the tax rate of Rs 250 per set will continue to be charged.

Therefore, different slabs of mobiles phones would be issued for imposition of the RD on the same. The low-valued mobile phone would be subjected to existing Rs 250 per set RD. The second higher category of mobile phone would be subjected to 10 percent RD and most expensive phones would be subjected to 20 percent RD, sources said while referring to the proposed measure.

The government has already tabled Finance Supplementary (Amendment) Bill, 2018 before the Parliament but so far it has not yet submitted list of items on which the RD has been increased for 2018-19.

Talking to reporters, FBR Member Customs Zahid Khokhar said that the government decided to make four slabs for imposition of RD on import of expensive mobile phones and higher duty would be imposed on high-valued cell phone.

He said that the government decided to increase RD on luxury items at different rates with the objectives to discourage import of luxury and unnecessary items. "We have made efforts to overcome trade imbalance and improve balance of payment situation," he added.

The government has imposed regulatory duty on 312 new customs tariff lines (5-20 percent) covering luxury and non-essential items and enhanced RDs (10 percent to 15 percent) on 295 existing customs tariff lines.

Through the Finance Supplementary (Amendment) Bill, 2018, the government has enhanced tax burden on some specific sectors like tobacco, vehicles and mobile phones, etc, and withdrawn some tax incentives given to businesses/individuals through the Finance Act 2018.

According to the Federal Board of Revenue (FBR), the regulatory duties have been an effective tool in maintaining stability of the current account position, competitiveness of the domestic manufacturing sector and to promote import substitution. To this end, the RD regime is being broadened to include additional luxury/non-essential items.

It is also the desire of the government to introduce fairness in its fiscal measures, especially with regard to items where both the rich and the poor are treated alike. A glaring example of inequity is the single rate of duty on import of a mobile phone irrespective of its price i.e. a basic unit (costing Rs 3,000-4,000 and a high-end Smartphone (costing Rs100,000) both suffer the same incidence i.e. Rs 250/set. To rectify such inconsistencies, the RD structure on imports of mobile phones is being revised in an equitable manner, the FBR added.