ISLAMABAD: While terming the budget for the next fiscal year as hope for all the tiers of society, Finance Minister Shaukat Tarin said, on Friday that the government did not impose any tax on wheat flour and flour products.
While winding up the debate on the budget for the next fiscal year in the National Assembly, the finance minister said that the Section 203 has been reworded and now a three-member committee, after due process, would decide about the arrest of habitual/wilful tax defaulters.
The minister said that 12 withholding taxes are being withdrawn and some of the recommendations are being forwarded by the Senate and suggestions made by the members during the debate are being incorporated. Tarin said the government has decided to reduce the taxes on up to 1,000cc vehicles, withdrawn tax on medical bills and provident funds of the government employees.
He further stated that increase in tax on milk and dairy products (from 10 to 17 percent) has been withdrawn, whereas tax on real estate investment trust certificates, which was increased to 25 percent, was being reduced to 15 percent.
The finance minister said that tax on IT platforms of e-commerce has been reduced to zero on registered, and on unregistered e-commerce a tax of two percent has been imposed.
The minister further stated that increase in income tax on construction package – from 20 percent to 35 percent – has been brought down to 20 percent and exemption in income tax on oil refineries would be available for upgradation of existing refineries, BMR, and extension.
There will be no tax on internet or SMS services; however, on mobile phone call beyond five minutes there would be 75 paisa tax, he said, adding that tax on milk has been abolished.
The finance minister said that 17 percent tax on gold and silver is being reduced to one percent and three percent, respectively, while on their value addition, tax would remain 17 percent.
On poultry and cattle feed, tax was being reduced to 10 percent.
He said that there would be no tax on import of eggs and hatching, wheat flour and flour products, while tax increase on textile products was being withdrawn.
The finance minister also dwelled on the state of economy the present government inherited, and stated that the current account deficit was $20 billion along with short-term borrowing of $8-10 billion, creating a financing gap of $28 billion.
As a result, the government had no other option but to take a front-loaded International Momentary Fund (IMF) programme. The IMF adopted a harsh attitude and the discount rate was increased to 13.25 percent, the exchange rate was taken to Rs169 against dollar, while gas and electricity tariffs were raised.
The minister said that during the previous government tenure, tax growth was static and the GDP growth was shown by taking debt.
The debt was increased to Rs30 trillion in the fiscal year 2018 from Rs6 trillion in 2008.
The finance minister said that steps taken by prime minister Imran Khan and the way Covid-19 was handled, the country achieved growth of four percent during the current fiscal year on the back of industries, housing and construction, and agriculture output.
As the economy has stabilised now, the government’s focus would now be on inclusive and sustainable growth to create new job opportunities and enhance the income levels of people.
He said that the growth strategy would target the poor 4 to 6 million households.
The interest-free loans of up to Rs300,000 would be provided to families associated with the agriculture sector for crops, and Rs200,000 for implements, while Rs500,000 interest-free loans would be provided to each household in urban areas to start their own businesses. They would also be given health cards.
He said that tax target for the next fiscal year has been set at Rs5.8 trillion and the tax system is also being reformed, so as to ensure minimum contact between the taxpayers and the tax officials.
The finance minister said the public sector development plan has been increased by 40 percent to Rs900 billion for the next fiscal year from Rs630 billion that would bring about growth and development.
The government would increase spending on agriculture to increase productivity so that the country does not remain a food importer.
As regards the industrial sector, he said incentives of Rs45 billion are being provided to the industry to increase its competitiveness for providing employment and lessen dependence on imports.
The SME sector is a government priority and is being provided Rs100billion collateral-free loans, a new policy for auto sector is being prepared, and “My car scheme” is being introduced.
“We have accepted all the demands of the IT sector to increase its exports,” he added.
Allocation for Ehsaas Programme has been enhanced to Rs260 billion to provide assistance to under-privileged segments of society.
He said the government would provide targeted subsidies to the low-income groups on power tariff, flour, ghee, and sugar.
He said $1.1 billion had been earmarked for the purchase of anti-Covid vaccines. Five billion rupees had been set aside for the development of E-voting system.
The minister said the government wanted the Chinese companies to relocate in special economic zones established under the China-Pakistan Economic Corridor for exports. About the power sector, the minister said that capacity payment was a major challenge for the government and the IMF had been told that the government could not afford to increase tariff because it would hurt the industry and the people.
Copyright Business Recorder, 2021
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