ISLAMABAD: The government has announced new taxation/enforcement measures of nearly Rs 1,800 billion through withdrawal of exemptions and increase in withholding tax rates on buying/selling of properties, increased tax rates on late-filers, higher tax on salaried/non-salaried classes and retailers and 18 percent sales tax on mobile phones, dairy products (milk) and 5 percent Federal Excise Duty (FED) on commercial properties to meet target of Rs 12,970 billion for 2024-25.
This was stated by Federal Board of Revenue (FBR) Chairman Amjad Zubair Tiwana while giving technical briefing to the media on Finance Bill 2024 at the FBR Headquarters here on Wednesday. Out of policy measures of nearly Rs 1,800 billion, the administrative and enforcement measures stand at Rs 250 billion for 2024-25.
The FBR has estimated to generate Rs 2,000 billion from autonomous growth in the next fiscal year. We would be required an additional revenue of Rs 3,800 billion in the next fiscal year, he said. The income tax measures totalled at Rs 443 billion and personal income tax (PIT) changes amounted to Rs 224 billion. The sales tax measures totalled at Rs 485 billion and Federal excise duty measures amounted to Rs 289 billion. The customs duty measures totalled at Rs 70 billion.
Tax exemptions, zero-rating cost kitty over Rs3.87trn
The FBR has withdrawn exemptions of Rs 434 billion.
Within the category of sales tax, the exemption has been withdrawn to the tune of Rs350 billion.
The FBR chairman said changes in withholding tax regime would result in generating revenue of Rs 125-Rs 130 billion.
“To meet FBR’s annual tax collection target of Rs 12.97 trillion in the next fiscal year, the FBR calculated that it will collect Rs 2 trillion through nominal growth and collection out of stuck-up revenues cases into superior courts while the remaining Rs 1.761 trillion will be generated in the shape of additional taxation and enforcement measures,” FBR Chairman said.
However, Tiwana said that there was pressure for increase GST standard rate from 18 to 19 percent but they did not increase it.
The increase in tax rates for salaried class would have a revenue impact of Rs 100 billion and non-salaried class Rs 150 billion, he added.
The FBR imposed 18 percent sales tax on all locally produced milk, infant milk and other dairy products.
FBR Chairman pointed out that the FBR has also proposed a ban on foreign traveling of non-filers.
The government has imposed 10 percent sales tax on poultry feed; 10 percent tractors, 10 percent on oil residue and 10 percent sales tax on edible vegetables from Afghanistan.
Tiwana said that the newsprint would be subjected to 10 percent sales tax, imported personal computer 10 percent and sales tax on stationery items and many others items.
The prices of motor vehicles have substantially increased, therefore in order to capture true potential of tax it is proposed that basis of tax collection may be changed from engine capacity to percentage of value in cases of all motor vehicles. Moreover, it is also proposed that percentage of tax collection may also be increased in cases of vehicles having engine capacity of more than 2000cc.
The government has withdrawn various exemptions/zero rating and reduced/fixed rates. Mobile phones to be taxed at standard rate (other than mobile phones valuing exceeding US$ 500 which will remain chargeable to existing rate of 25%).
The FBR has enhanced reduced rate of sales tax from 15% to 18% on supplies made by the POS retailers dealing in leather and textile products. withholding regime for lead, coal, scrap of paper and plastic, silica etc. Iron and steel scrap to be exempted from levy of sales tax.
A phased withdrawal of exemption granted to ex-FATA/PATA. Board has been empowered to fix minimum price of the goods falling under Third Schedule. Zero-rating of petroleum products is being converted into exemption. Rate of default surcharge is to be aligned with the SBP’s policy rate of KIBOR plus 3%.
The FBR has imposed FED on acetate tow @ Rs. 44,000; FED on nicotine pouches @ Rs. 1200 per kg; enhanced FED on e-liquids; FED @ Rs. 15 per kg on commercial supply of sugar to manufacturers.
The rate of FED on cement is being enhanced from Rs 2 per kg to Rs. 3 per kg. FED on commercial properties and first sale of residential properties @ 5%. Rate of FED on filter rod to be enhanced from Rs.1500 per kg to Rs.80,000 per kg. power to seal business premises of retailers selling illicit cigarettes and price threshold for local manufactured cigarettes increased from Rs9,000 to Rs.12,500.
FBR Chairman said that the government has raised taxes on salaried, non- salaried class, real estate, retailers, and vehicles, removed GST exemptions, and slapped taxes on milk and milk products, mobile phones, tier-1 retailers of branded stores at 18 percent
At present, persons deriving income from exports have to pay a 1% tax on their export proceeds which is the final tax. On the principle of horizontal equity that taxpayers with equal income should pay equal tax, it is proposed income from exports be subjected to normal rates with one percent tax collection on their export proceeds be treated as minimum tax. To penalize non-filers, the rate for non-filers for dealers, distributors, and wholesalers is being enhanced from 0.2% to 2% and for retailer non-filers from 1% to 2.5%. The tax rates for non-salaried individuals and associations of persons and salaried individuals have changed. The limit of taxable ceiling has been kept unchanged at Rs 600,000. Beyond this threshold, tax rates for non-salaried individuals have five taxable slabs with progressive tax rates ranging from 15% to 45%.
For salaried individuals, beyond the threshold of Rs.600,000 per annum, there are five taxable slabs ranging from 5% to 35%.
Five years exemption from tax on income and from withholding taxes with effect from 1st day of July, 2018 was provided to FATA/PATA up to 30th day of June, 2023 which was extended for one year up to 30th day of June, 2024. It is proposed that further exemption from income and withholding taxes may be extended for another one year up to June 30, 2025.
Copyright Business Recorder, 2024
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