Govt to Remove Sales Tax on Laptops and IT Equipment

According to credible sources, the government is considering removing the sales tax on laptops and information technology (IT) equipment from the Finance Bill 2022-23.

The government is exploring tariffs and tax exemptions for the creation of Cloud Infrastructure, as well as the reduction of the Advance Income Tax (AIT) on telecom services to 8%, among other measures.

To help the IT sector, the IT and Telecom Division offered the following proposals:

1. Exemption from duties and taxes for the installation of cloud infrastructure
2. The Pakistan Software Export Board (PSEB) will receive 5% of annual IT export value for export promotion.
3. The telecom sector will be exempt from the State Bank of Pakistan’s (SBP) 100 percent LC margin legislation, which will take effect on April 7, 2022.
4. Laptops and IT equipment will be exempt from sales tax.
5. Advance Income Tax (AIT) on telecom services has been reduced to 8%.
6. Rates on communication services should be rationalised and standardized at the federal and provincial levels.

After appropriate consultation with stakeholders, Prime Minister Shehbaz Sharif has asked the Information Technology and Telecom Division to produce a strategy to increase IT and Telecom export to $ 15 billion in the next two years. He promised the IT and Telecom Division all possible cooperation in accomplishing this goal at a recent high-level meeting. The presentation was received at the eleventh hour, denying the Cabinet members adequate time to evaluate the recommendations.

The Cabinet Secretary stated that although instructions had been issued to the Ministries and Divisions to submit their summaries well in advance of the cabinet meeting and in accordance with the Rules of Business, 1973, infractions continued to occur. The Cabinet Secretary went on to say that requesting cabinet decisions based on a presentation was not permitted under the Rules of Business, 1973, because all decisions must be based on a summary.

Wherever a financial decision is requested, he indicated that the Cabinet may give its permission in principle, and that the IT and Telecom Division should submit their ideas to the Economic Coordination Committee (ECC) for comprehensive discussion after consulting with key parties. Following that, the ECC’s decision would be presented to the Cabinet for approval.