Taxes, duties lowered to give incentives to business community

[Lahore_Real_Estate]

Islamabad—The government has lowered or abolished duties and taxes in the budget as an incentive to the people and businessmen.

Finance Minister Abdul Hafeez Shaikh while presenting budget in the Parliament said this budget presents a vision for future tax reform in Pakistan.

“We believe in equitable taxation; all sectors of the economy and all

Persons deriving income beyond the exemption limit should be brought in the tax net.” In this context we are working closely with the provinces to improve the systems and collections from agriculture income tax, sales tax on services and taxes on property.

He said he had already spoken in detail about the efforts at the federal level to bring non-taxpayers into the tax net and to minimize tax evasion. In our vision the tax system needs to be simple. As such, we propose to move away from multiple tax regimes and retain just three main taxes – income tax, sales tax and custom duties.

He said to further this objective, he announced to abolish all special excise duties. In addition, 15 items out of the list of 46 federal excises are proposed to be removed from the excise law. 392 regulatory duties out of 397 are proposed to be abolished, limiting these to luxury vehicles, cigarettes, arms and ammunitions, betel nuts and sanitary ware / tiles. FED on cement shall be phased out in 3 years. A reduction of Rs. 200/MT is proposed in the first year and equal reduction of the balance of Rs. 500/MT in the next two budgets. Further, federal excise duty on beverages is also being phased out. It is being reduced to 6% this year and would be completely abolished next year. He said the revenue loss on account of the above measures would be compensated by the following:

• Removal of selected exemptions and zero-ratings under GST.

• Revision of federal excise structure on cigarettes.

• Revision in rate of tax in lieu of value added tax on commercial importers from 2% to 3%.

• Improving tax compliance through effective monitoring and risk based audits The Government has also decided to raise the tax-free limit from Rs. 300,000 to Rs. 350,000.

However incomes above Rs. 300,000 would continue to be subjected to filing of returns, to institute a culture of compliance; no wealth statement would be required on incomes upto Rs. 1 million; at present the threshold is Rs. 500,000. The government is not increasing custom duty on any product. In fact, for 31 categories, customs duty is being simplified and reduced.

Custom duty on 22 essential raw materials for the pharma industry used for producing anti-biotic, anti-allergic, anti-diabetic and TB medicines are being reduced substantially. There will be no extension in the duration of the one-off taxes levied due to floods: 15% surcharge on income tax and 1.5% increase in special excise duty. Regulatory duty on 392 out of 397 items is being abolished.