The Ministry of Information Technology after failing to move Central Board of Revenue (CBR) against 15 percent GST on computers has decided to seek Prime Minister's help for its removal, Business Recorder learnt on Thursday.
Sources said that a meeting on the issue was likely to be held with the Prime Minister, Shaukat Aziz two weeks ago, which had to be postponed due to the cabinet meeting. However, it will take place anytime, they added.
They said that the 15 percent GST imposed by the government during 2006-07 federal budget has increased the cost of doing business for IT services and negates the government claim of expanding the sector.
"The government step shattered, particularly the middle class student hopes of having his own computer and made difficult the plans of producing 300,000 IT graduates by 2010", believes an official of Pakistan Software Export Board (PSEB) who had attended a series of result less meetings of IT ministry and IT industry with the CBR authorities.
He said the GST imposition has jeopardised an MoU between one of the leading Chinese hardware manufacturing company and a Pakistani hardware company for setting up an assembling line with the annual production capacity of 500,000 computers for domestic and regional market.
He said that the government imposed 15 percent tax on computers and its components but removed only 5 percent custom duty and reduced withholding tax from 6 percent to 1 percent. Previously, no duties existed in any case on the import of components.
The PSEB believes that the most severely impacted by the imposition of the GST on computer are the students, government officials who could least afford the price increase as they have to pay Rs 3000 - Rs 6000 more, thus undermining the overall computerisation and computer literacy of the society. He said that the IT being the highest growth industry is poised to become the engine of growth for the economy as it has in other developing countries.