Additional taxation steps taken thru amendments to Finance Bill

ISLAMABAD: After taking taxation measures of Rs1.761 trillion in budget (2024-25), the government, Friday, took additional taxation measures through amendments to the Finance Bill 2024 including 10 percent surcharge on tax liability of every individual including salaried individuals and association of persons where the taxable income exceeds Rs10 million.

According to the amendments introduced in the Finance Bill 2024 on Friday, a surcharge shall be payable by every individual and association of persons at the rate of 10 per cent of the income tax imposed under Division-I of Part-I of the First Schedule where the taxable income exceeds Rs10 million.

The government imposed 10 per cent sales tax on stationery items except exercise and textbooks.

Exemptions withdrawn: Rs1.8trn new taxation measures unveiled

The government has also increased the Federal Excise Duty (FED) on cement from Rs 3 per kg to Rs 4 per kg through an amendment in the Finance Bill. In budget (2024-25), the rate of FED on cement was enhanced from Rs. 2 per kg to Rs. 3 per kg.

Besides, raise in the excise duty on international air travel, the federal excise duty (FED) of Rs15 per kg would be applicable on the supply of white crystalline sugar by any person to a manufacturing, processing or packaging entity.

Through amendment in Finance Bill 2024, the Federal Board of Revenue (FBR) has imposed capital value tax on a farmhouse and a residential house, within the territorial limits of the Islamabad Capital Territory on the basis of the area of the farmhouse irrespective of its value. The CVT would be Rs500,000 for the farmhouse with an area between 2,000 square yards and 4,000 square yards and Rs1,000,000 if the area exceeds 4,000 square yards. The CVT would be Rs1,000,000 for the residential house with an area between 1,000 square yards to 2,000 square yards, and Rs1,500,000 if the area exceeds 2,000 square yards.

Under the amended Finance Bill 2024, the federal government has hiked the excise duty on business and club class air tickets up to Rs350,000 in federal budget 2023-24.

Economy and economy plus air tickets issued on or after the 1st day of July 2024 will pay Rs12,500 duty on tickets.

Individuals traveling to the Middle East and African countries, including destinations like Dubai and Saudi Arabia, will pay Rs105,000 duty on their business/club class air tickets, up Rs30,000 compared to the outgoing fiscal year.

Travelers will now pay Rs100,000 excise duty per business/club class ticket for going to the United States and Canada. For individuals going to North America, Latin America, and Canada, duty has been increased from Rs250,000 to Rs350,000 per business/club class ticket.

The duty on business and club class tickets to European destinations has been increased by Rs60,000 to Rs210,000, while duty on the same category of tickets for traveling to New Zealand and Australia has also been increased to Rs210,000.

For travel to China, Malaysia, and Indonesia, the excise duty on business and club class tickets has been increased to Rs210,000.

According to a tax expert, the reduced rate of 8.5 per cent and 12.75 per cent for hybrid vehicles with engine capacity of up to 1800cc and between 1801-2500cc, respectively will continue.

However, proposed amendments have limited this benefit till June 30, 2026.

Under the bill, the government has extended sales tax benefits given to erstwhile tribal areas for another one year till June 30, 2025.

The government has maintained its earlier stance of taxing export income at corporate tax of 29 per cent + applicable super tax. Previously, exporters were paying one per cent of export turnover which was full and final.

The amended Finance Bill 2024 revealed that the rate of duty would be three per cent of gross amount of consideration involved where the buyer appears on active taxpayer list on the allotment or transfer of commercial property and first allotment or first transfer of open plots or residential property by any developer or builder.

Copyright Business Recorder, 2024