The government has taken new taxation measures of Rs 93 billion including an increase in additional customs duty from 1 to 2 percent on imports across the board, review of regulatory duties on 731 customs tariff lines, raise in further sales tax from 2 to 3 percent, rationalization of withholding tax for non-filers, a reduction in income tax rates for individuals and a one percent withholding tax on payments remitted abroad through credit/debit/prepaid cards.
Giving technical briefing on the Federal Board of Revenue (FBR) measures, FBR Chairman Tariq Pasha informed media persons on Friday that the FBR has taken taxation measures of Rs 93.320 billion for 2018-19 to meet the assigned target of Rs 4435 billion. Total relief measures stood at Rs 184.499 billion. The net impact of taxation and relief measures comes to Rs 91.179 billion for 2018-19.
Breakup of taxation and relief measures revealed that customs duty measures come to Rs 28.970 billion. The relief measures of customs duty totaled Rs 6.195 billion. The net impact of taxation and relief measures of customs duty was Rs 22.775 billion.
The FBR has taken sales tax and federal excise measures of Rs 50.400 billion and relief of Rs 28.960 billion. The net impact of taxation and relief measures of sales tax and federal excise is Rs 21.440 billion. The FBR has taken income tax measures of Rs 13.950 billion and relief of Rs 149.344 billion. The net impact of taxation and relief measures of income tax totaled at Rs 135.394 billion.
The rate of further tax under section 3(1A) of Sales Tax Act, 1990 is enhanced from 2% to 3% which would generate Rs 10-12 billion.
The increase of additional customs duty from 1 to 2 percent on imports across the board would generate Rs 25-28 billion. The measure would have impact on 7200 customs tariff lines. The FBR Member Customs said the regulatory duties have been increased on 100 tariff lines and decreased on 100 tariff lines. Overall regulatory duties were imposed on 731 tariff lines which have now been reduced to 521 tariff lines.
The rationalization of withholding tax rates for non-filers would generate Rs 1.6 billion. The FBR has consistently espoused the policy of creating a distinction between compliant and non-compliant taxpayers. In order to enhance the cost of doing business for non-filers, withholding tax rates have been increased for non-filers in the case of supplies/sale of goods and contracts under section 153 of the Ordinance. For sales/supplies, the rate of tax for non-filers has been increased from 7% to 8% in the case of companies and from 7.75% to 9% in the case of persons not being companies. For contracts, the rate of tax for non-filers has been increased from 12% to 14% in the case of companies and from 12.5% to 15% in the case of persons not being companies.
Presently, there are seven taxable slabs for non-salaried individuals with the highest slab having a tax rate of 35% whereas there are eleven taxable slabs for salaried individuals with the highest slab having a tax rate of 30%. In pursuance of the policy announced by the Prime Minister, the Income Tax (Amendment) Ordinance, 2018 was promulgated on April 08, 2018. In a bid to provide relief to individuals (including salaried individuals) the maximum tax rate for all individuals has been reduced to 15% and five taxable slabs for all individuals have been introduced including a nominal tax slab of Rs 1000 for persons earning income exceeding Rs 400,000 up to Rs 800,000 and another nominal income tax slab of Rs 2000 for persons earning income exceeding Rs 800,000 up to Rs 1,200,000.
The rate of duty on locally produced cigarettes is being enhanced which would generate Rs 107-108 billion in 2018-19 as compared to estimated amount of revenue of over Rs 90 billion in 2017-18.
The FBR has given sales tax relief of Rs 17 billion on fertilizers. To provide a reduced rate of sales tax @ 2% on all fertilizers across the board and to provide for reduced rate from 10% to 5% on supply of natural gas to fertilizer plants for use as feed stock. Moreover, rate of sales tax on LNG imported by fertilizer manufacturers for use as feed stock is also being exempted.
Input tax adjustment is being allowed on packing materials to five export sectors covered under SRO 1125(I)/2011, dated 31.12.2011. The measure would cause a revenue loss of Rs 13 billion in 2018-19.
The Federal Excise Duty on cement is being increased from 1.25 per kg to Rs 1.50 per kg. The measure would generate Rs 11.5 billion for 2018-19.
The rate of sales tax for steel sector is being increased to Rs 13 per unit of electricity consumed. Moreover, the rate of sales tax for other allied steel industries ie ship breakers and re-rollers is also being rationalized. The measure would generate Rs 12 billion in 2018-19.
The FBR would generate Rs 1 billion from withholding tax on payments remitted abroad through credit/debit/ prepaid cards. The credit cards/debit cards are being utilized to pay for foreign travel, lodging, shopping etc and also for online shopping from merchants outside Pakistan. This results in outward flow of foreign remittance through the banks issuing such credit/debit cards. There is also a need to document such transactions in order to complement efforts aimed towards broadening of the tax base. Banks issuing credit /debit cards will now be obliged to collect 1% advance tax from filers and 3% advance tax from non-filers in respect of credit/debit card transactions resulting in outward flow of remittances from Pakistan.
The scope of services under Islamabad Capital Territory (Tax on Services) Ordinance, 2001 is being increased owing to the fact that services which are chargeable to sales tax in provinces are not chargeable to sales tax in Islamabad Capital Territory (Tax on Services) Ordinance, 2001.
Through the Finance Bill 2018, exemption is being granted on import of 21 types of computer parts imported by manufacturers registered with and certified by Engineering Development Board for assembling and manufacturing of personal computers and laptops in accordance with quota determined by IOCO.
Comments
Comments are closed.