New Rs438bn taxation measures enforced

ISLAMABAD: The government has enforced new taxation measures of Rs 438 billion, taken through Finance Act 2023 from July 1, 2023, including 0.6 percent withholding tax on cash withdrawals by non-filers from banks, changes in customs duty/ regulatory duty regime on imports, increase in tax rates for non-filers and sales tax changes on services within the Islamabad Capital Territory (ICT).

From the start of the new fiscal year (2023-24), the FBR will charge a 15 percent sales tax on Electric Power Transmission Services provided within the territorial jurisdiction of Islamabad Capital Territory (ICT).

Sales tax has been increased from 12 per cent to 15 per cent on supplies made by POS retailers dealing in leather and textile products from July 1, 2023.

Advance tax on registration of vehicles above 2000cc hiked

Moreover, the FBR has increased the rate of “further sales tax” from 3 to 4 percent in the amended Finance Bill 2023.

The government has increased the advance income tax on the registration of vehicles above 2000cc from July 1. In this regard, the government has imposed a fixed tax on imported and locally manufactured vehicles from 2001cc to above 3000cc.

Under the Finance Act 2023, the government has imposed a super tax on all persons having income above Rs150 million, 0.6 percent withholding tax on cash withdrawals by non-filers from banks and a re-imposition of 10 percent withholding tax on issuance of bonus shares and raised withholding taxes on supplies/ contracts/ services from new fiscal year (2023-24).

Finance Act 2023 has also enforced a 20 percent federal excise duty (FED) on juices.

The 0.6 percent withholding tax will be charged again to non-Active Taxpayers List (ATL) people when they withdraw cash beyond Rs50,000. The withholding tax rates on goods supply (except rice, cottonseed, or edible oils), services (except electronic and print media advertising), and contracts (except sportspersons) have been increased by one percent.

The withholding tax rate for commercial importers of specific goods has been increased by 0.5 percent to six percent. A final withholding tax of 10 per cent will be charged on bonus shares issued by a company, or 20 per cent for non-ATL.

The withholding tax rate on payments to non-residents using debit/ credit or prepaid cards has been increased from one percent to five percent for ATL people, or from two percent to 10 percent for non-ATL people. An adjustable advance tax of Rs200,000 will be charged when issuing a work permit/ visa for a foreign domestic helper.

An additional tax of up to 50 percent may be charged on the income of a person or group due to extraordinary gains from outside factors.

The government has withdrawn sales tax on edible products sold in bulk under brand names or trademarks.

According to the Finance Act 2023, the government has made amendments in the Islamabad Capital Territory (Tax on Services) Ordinance, 2001. The FBR will charge 15 percent sales tax on services provided or rendered by hotels, motels, guest houses, farmhouses, marriage halls, lawns, clubs and caterers within the Islamabad Capital Territory (ICT) from July 1, 2023.

Five percent sales tax would be applicable where payment against services is received through debit or credit cards, mobile wallets or QR scanning subject to the condition that no input tax adjustment or refund shall be admissible. This is applicable on services provided by restaurants including cafes, food (including ice cream) parlours, coffee houses, coffee shops, Deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets, etc.

Fifteen percent sales tax would be applicable where payment is received in cash on services provided by restaurants including cafes, food (including ice cream) parlours, coffee houses, coffee shops, Deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets, etc.

Fifteen percent sales tax would be applicable on the IT services and IT-enabled services.

Copyright Business Recorder, 2023