The federal government of Pakistan has recently proposed the imposition of a standard 18 percent sales tax on all mobile phones valued below $500 (approximately Rs139,008 as of June 19, 2024). This move, outlined in the budget for the fiscal year 2024-25, has significant implications for the prices of mid-range mobile phones dezgo ai from various companies, including popular brands like Infinix. Presented by Finance Minister Muhammad Aurangzeb on June 12, the proposal is set to take effect from July 1, 2024, if approved.

Overview of the Proposal

Key Details of the Finance Bill 2024

The finance bill 2024 introduces a standard 18% sales tax on all mobile phones priced below $500. This proposal aims to generate additional revenue for the government and align tax policies with the growing mobile phone market in Pakistan. The move marks a significant shift from previous tax rates and is expected to impact a large segment of the consumer electronics market.

Expected Impact on Mobile Phone Prices

If the proposal is approved, consumers can expect a noticeable increase in the prices of mid-range mobile phones. Brands like Infinix, which are popular for offering affordable yet feature-rich smartphones, will be directly affected. The price hike might deter some consumers from purchasing new devices, potentially slowing down the growth of the mobile phone market in the country.

Implications for Consumers

Financial Burden on Consumers

The proposed sales tax will increase the cost of purchasing mobile phones, placing a greater financial burden on consumers, especially those in the middle-income bracket. For many, mobile phones are not just a luxury but a necessity for communication, work, and access to information. The increased prices could make it more challenging for these consumers to afford new devices.

Shift in Consumer Preferences

With the higher prices, consumers might shift their preferences towards either lower-priced models or delaying their purchases. Alternatively, there could be a rise in the demand for second-hand or refurbished phones as consumers seek more affordable options.

Impact on the Mobile Phone Market

Market Dynamics

The imposition of the 18% sales tax is likely to alter market dynamics. Mid-range mobile phones, which previously offered a balance between affordability and functionality, will see a price hike, potentially leading to a decline in sales. Manufacturers and retailers might need to adjust their strategies, possibly by offering promotions or discounts to mitigate the impact of the new tax.

Competitive Landscape

Brands that primarily operate in the mid-range segment, such as Infinix, might face tougher competition as consumers re-evaluate their purchasing decisions. On the other hand, premium brands that already sell devices above the $500 mark might not be as affected by the tax change, potentially gaining a competitive edge in the market.

Government’s Perspective

Revenue Generation

From the government’s perspective, the imposition of an 18% sales tax on mobile phones under $500 is a strategic move to increase revenue. Given the widespread use of mobile phones in Pakistan, this tax could contribute significantly to the national budget, helping to fund various public projects and initiatives.

Economic Considerations

The proposal also reflects broader economic considerations. By taxing a high-demand product, the government aims to tap into a lucrative revenue stream. However, it must balance this with the potential negative impact on consumer spending and the overall economy.

Industry Reactions

Responses from Mobile Phone Manufacturers

Mobile phone manufacturers are likely to express concerns over the proposed tax. The increased costs could impact their sales volumes and market share. Companies may need to reconsider their pricing strategies and possibly absorb part of the tax to remain competitive.

Retailers’ Concerns

Retailers might also be worried about the potential decrease in sales. With higher prices, consumer purchasing power could diminish, leading to lower turnover rates for mobile phone retailers. This could result in tighter profit margins and a need for innovative marketing strategies to attract buyers.

Prices of Infinix Models to Increase in Pakistan from July 1

The prices of these Infinix mobile phones are expected to go up from July 1, 2024:

Infinix Smart 7 HD (2GB+64GB) /ZE

Infinix Smart 8 (3GB+64GB)/ZE

Infinix Smart 8 (4GB+64GB) / TOB

Infinix Smart 8 Pro (4GB+128GB)/ZE

Infinix Hot 30 Play (4GB+64GB) / TOB

Infinix Hot 30 Play (8GB+128GB) / TOB

Infinix Hot 30i (4GB+128GB) / TOB

Infinix Hot 30i (8GB+128GB) / TOB

Infinix Hot 40 (8GB+256GB) /ZE

Infinix Hot 40 Pro (8GB+256GB) /ZE

Infinix Hot 40i (4GB+128GB) /ZE

Infinix Hot 40i (8GB+128GB) /ZE

Infinix Hot 40i (8GB+256GB) /ZE

Infinix Note 30 (8GB+256GB) /ZE (with free Infinix Bottle)

Infinix Note 30 Pro (8GB+256GB) /TOB

Infinix Zero 30 4G (8GB+256GB) /TOB

Infinix Note 40 (8GB+256GB) /ZE

Infinix Note 40 Pro (12GB+256GB) /ZE