Telcos Push Govt to End Customs Duty
The telecom sector in Pakistan has formally submitted a comprehensive set of policy and fiscal recommendations for the Federal Budget 2026-27 urging the government to reduce taxes, eliminate certain customs duties, and create a more investment-friendly environment. The proposals, shared through the Telecom Operators’ Association with the Ministry of Information Technology and Telecommunication aim to support digital expansion, improve affordability, and strengthen Pakistan’s long-term connectivity infrastructure.
Govt Considering Relief in PTA Mobile Phone Taxes for Overseas Pakistanis
Industry stakeholders argue that although telecom services play a central role in Pakistan’s digital economy, the sector continues to face significant financial stress due to heavy taxation, rising operational costs, currency depreciation, and large-scale infrastructure investment needs. They believe that meaningful tax reforms are essential to sustain growth and expand digital access across the country.
Pressure on Telecom Sector and Economic Challenges
Telecom companies have highlighted that Pakistan’s digital infrastructure requires continuous investment, particularly in expanding 4G coverage, broadband penetration, and future 5G readiness. However, high taxes and duties have made it increasingly difficult for operators to maintain profitability while also investing in expansion projects.
According to industry estimates, more than 30 percent of Pakistan’s population still lacks proper 4G coverage, while around 12 percent remains without basic mobile signal access. In addition, fixed broadband penetration is reported to be below 2 percent, indicating a major gap in digital connectivity. The sector believes that these challenges are directly linked to high taxation and limited investment capacity.
Key Proposals for Budget 2026-27
One of the major proposals submitted by telecom operators is the reduction of withholding tax under Section 153 of the Income Tax Ordinance, 2001, from 6 percent to 4 percent. The industry has also recommended making this tax adjustable instead of treating it as a minimum tax, which would improve cash flow for companies.
Another important suggestion includes increasing the carry-forward period for turnover tax credits under Section 113 from two years to five years. According to telecom operators, the current short timeframe creates financial pressure and limits long-term planning for infrastructure development.
The industry has also proposed reducing advance income tax on telecom services under Section 236 from 15 percent to 8 percent. They argue that high upfront taxes on mobile usage disproportionately affect low-income and prepaid users, discouraging digital adoption and increasing the cost of communication services.
Chery is Officially Launching 3 New More Affordable Cars in Pakistan
Call for Abolishing Customs Duties on Telecom Equipment
A key highlight of the telecom industry’s proposal is the complete removal of customs duties on the import of 5G and fixed-line telecom equipment. This includes network infrastructure, smartphones, servers, batteries, SIM cards, and other essential components used in telecom operations.
The industry claims that high import duties significantly increase deployment costs and delay the rollout of next-generation technologies, especially in rural and underserved areas. It is estimated that rationalizing these duties could unlock around Rs. 12 billion in additional investment for network expansion and digital infrastructure development.
University of Health Sciences Approves 7 New Certificate Courses
Focus on Fiber Expansion and Broadband Growth
Telecom operators have also recommended reducing duties and taxes on optical fiber cable imports from approximately 67 percent to just 5 percent. They argue that high fiber deployment costs are one of the biggest barriers to expanding broadband services across Pakistan.
Fiber infrastructure is considered essential for improving internet speed, reliability, and coverage, particularly in urban centers and industrial zones. Industry experts believe that lowering costs in this segment would significantly accelerate digital transformation in the country.
Tax Compliance and Regulatory Concerns
Another important recommendation includes withdrawing the Commissioner’s authority under Section 147(6B) of the Income Tax Ordinance, which currently allows rejection of taxpayers’ advance tax estimates. The telecom industry argues that this provision increases uncertainty, compliance costs, and legal disputes for businesses.
They believe that a more transparent and predictable tax system would encourage investment and reduce administrative burdens on telecom operators, allowing them to focus more on service improvement and infrastructure development.
Rupee Beats Dollar for 155th Straight Day But Crushed Again by Pound and Euro
Digital Economy and National Connectivity Goals
The telecom sector has emphasized that its recommendations align with Pakistan’s broader digital economy ambitions. As the country continues to push for digitization in financial services, governance, and commerce, reliable and affordable telecom infrastructure is seen as a critical foundation.
Industry representatives argue that reducing taxes and duties will not only benefit telecom companies but also improve access to digital services for millions of citizens. Lower costs could lead to increased smartphone usage, better internet penetration, and wider adoption of digital financial services.
Impact on Consumers and Digital Inclusion
If the proposed reforms are implemented, consumers are likely to benefit from reduced service costs and improved network quality. Lower taxes on mobile usage could make telecom services more affordable, especially for low-income and prepaid users who make up a large portion of the market.
Additionally, removing duties on telecom equipment could speed up network expansion, particularly in rural and remote areas where connectivity remains limited. This could play a crucial role in reducing the digital divide across Pakistan.
Investment and Economic Growth Potential
Telecom operators believe that rationalizing taxes will encourage long-term investment in the sector. With improved financial flexibility, companies may be able to expand infrastructure, introduce advanced technologies like 5G, and enhance service quality.
The industry also argues that better connectivity can have a multiplier effect on the economy by supporting e-commerce, digital payments, remote work, and online education. As a result, telecom reforms are seen not just as sector-specific changes but as part of broader national economic development.
Challenges in Policy Implementation
Despite strong industry support, the government may face challenges in implementing these recommendations due to revenue considerations. Telecom taxes contribute significantly to national income, and reducing them could impact short-term fiscal collection.
However, industry experts suggest that improved compliance, increased usage, and higher investment could offset potential revenue losses over time. A balanced approach will be required to ensure both fiscal stability and sector growth.
SBP Reserves Rise by $23 Million Near $16 Billion Again
Role of Budget 2026-27 in Telecom Reform
The upcoming Budget 2026-27 is expected to be a key opportunity for addressing these long-standing concerns. Policymakers will need to evaluate the telecom industry’s proposals carefully while balancing economic growth objectives with fiscal responsibilities.
Stakeholders are hopeful that the government will consider at least partial reforms, particularly in areas such as equipment duties, broadband expansion costs, and consumer taxation. Any positive changes could mark a major shift in Pakistan’s digital policy landscape.
FAQS
1. What is the main demand of the telecom industry in Budget 2026-27?
The industry is demanding tax reductions, removal of customs duties on telecom equipment, and reforms to improve investment conditions.
2. Why do telecom companies want customs duties removed on 5G equipment?
They believe high import duties increase costs and delay the rollout of advanced technologies like 5G.
3. How will tax reductions affect mobile users?
Lower taxes could reduce service costs, making mobile and internet usage more affordable for consumers.
4. What is the current telecom penetration issue in Pakistan?
More than 30% of the population lacks full 4G coverage, and broadband penetration remains very low.
5. Will the government accept these proposals?
No final decision has been made yet; proposals are under review for Budget 2026-27.
Final Words
The telecom industry’s recommendations reflect a strong push toward digital transformation in Pakistan. While fiscal constraints remain a challenge, the proposed reforms could significantly improve connectivity, reduce costs, and support long-term economic growth if implemented effectively.
US Journalist Confirms no Deal Yet to End Iran War Permanently