ISLAMABAD

Pakistan’s telecom sector has sought major tax relief and policy incentives in the upcoming federal budget, urging the government to reduce financial pressure on operators and accelerate investment in 4G, 5G and fiber-optic infrastructure nationwide.

Telecom companies have submitted detailed budget proposals to the federal government, warning that rising operational costs and heavy taxation are slowing the pace of Pakistan’s digital transformation.

Among the key demands, operators proposed cutting withholding tax from 6% to 4%, while also seeking a reduction in advance income tax on mobile users from 15% to 8% to make telecom services more affordable for low-income prepaid consumers.

Industry stakeholders said lowering taxes would directly support investment in fiber networks and future 5G deployment projects, particularly in underserved and rural areas where connectivity expansion remains costly.

The telecom sector has additionally proposed abolishing customs duties on 5G equipment and fiber-optic cables, estimating that the measure could unlock nearly Rs12 billion in additional investment across the industry.

Operators argued that cheaper telecom equipment and reduced deployment costs would significantly improve internet penetration and broadband access in remote regions of the country.

Telecom companies also called for extending the turnover tax credit adjustment period from two years to five years, saying longer recovery timelines are necessary for large-scale infrastructure financing and network expansion.

The sector further demanded the removal of discretionary powers allowing authorities to reject advance tax estimates submitted by telecom operators, arguing that unpredictable taxation frameworks create uncertainty for investors.

Industry representatives urged the government to take immediate steps to support nationwide expansion of 4G and future 5G services, warning that inflation, energy costs and currency pressures are increasingly affecting digital infrastructure growth.

According to telecom operators, the sector has invested more than $6.3 billion in Pakistan over the past six years while contributing over Rs1.9 trillion to the national exchequer through taxes, duties and regulatory payments.

Analysts say the proposals reflect mounting pressure within Pakistan’s telecom industry as operators seek policy support to sustain infrastructure investment amid rapidly rising demand for mobile broadband, digital services and next-generation connectivity technologies.

The demands come as Pakistan prepares for broader 5G adoption and intensified fiberization efforts aimed at strengthening the country’s digital economy and expanding internet access nationwide.