Income tax, sales tax and excise duty amendments in the Finance Bill 2018 will have an estimated a negative financial impact of Rs 4-5 billion on revenue collection target for next fiscal year. The Finance Bill proposed in the budget envisaged additional taxation measures of Rs 93.320 billion for 2018-19 while relief measures of Rs 184.499 billion gave a net negative impact of Rs 91.179 billion.
With the amendments in the Finance Bill 2018, the net negative impact will increase from Rs 91.179 billion to Rs 96.179 billion while the impact of Customs duty amendments on revenue is still being worked out by the Federal Board of Revenue (FBR). The government's decision to reduce sales tax on major input (rock phosphate) of fertilizer sector from 17 percent to 10 percent will have around Rs 2-3 billion impact on revenue; and reduction in federal excise duty (FED) on air travel from Rs 2,500 to Rs 2,000 per ticket would cause revenue loss of Rs 1.5 billion.
Reduction in the minimum tax for commercial exporters to 5 percent from 6 percent will be neutral, FBR sources claims, as it would encourage filing of income tax returns and thereby contribute to revenue. The government decision to reduce sales tax on fish babies to 5 percent and change tax structure for matchbox manufacturing factories would have a nominal revenue impact, sources said.
The government is expecting a positive impact of increase in custom duty on import of fish fillet from 11 to 20 percent and imposition of 20 percent custom duty on export of gypsum on overall revenue collection. Sources however told Business Recorder that given over ambitious revenue targets set in budgets during the PML-N government it will be even more of an uphill task for tax machinery to achieve 16 percent projected growth in revenue collection for next year given massive relief measures of Rs 184.499 billion for 2018-19.