Withholding Tax on cash withdrawal may go up: 16% GST likely on computer software

[Naveed Yaseen]

* Federal excise duty on cigarettes to increase by over 10%, 5% duty likely on import, sale of tea, coffee

By Sajid Chaudhry

ISLAMABAD: The government is considering to levy a 16 percent general sales tax (GST) on computer software and increasing the Withholding Tax (WT) on cash withdrawal from bank accounts in the upcoming budget 2009-10, official sources told Daily Times on Monday.

Also under consideration is an over 10 percent increase in federal excise duty on cigarettes, which is estimated to raise government revenues by Rs 13 billion.

Tea import: The government is also likely to impose 5 percent excise duty on the import and local sale of tea and coffee in order to add a few additional billions to government coffers.

The sources said the tax proposals were being finalised and a few new considerations had also been added to the list of measures to increase revenues.

The increased usage and sales of certified computer software worth millions of rupees across the country has urged tax authorities to consider the revenue potential of the business. Earlier, the tax authorities had imposed GST on computer hardware, which was strongly protested by the concerned stakeholders.

The federal excise duty on telecommunication services is likely to be decreased to maximise its potential, the official sources said, adding that increased usage of these services would result in increased revenues in the next fiscal year.

According to the sources, the government is considering elimination of 5 percent excise duty imposed in the last budget on the registration of new cars. The move is an effort to revive the local car industry by maintaining its employment level and enabling the manufacturers to increase production to meet the local demand.

The imposition of the 5 percent excise duty had resulted in reduction in car sales by around 50 percent in the FY0809.

The elimination of excise duty on the registration of new cars would reduce the cost price of cars in the country.

Other proposals under consideration are 5 to 10 percent federal excise duty on refrigerators, deep freezers and air conditioners.

The government move is possibly in line with its energy conservation policy and is likely to reduce the import and sales of theses products in the country.

The sources said two new taxes on real estate sector, capital gains tax and general sales tax on services, were likely to be imposed as well.

http://www.dailytimes.com.pk/default.asp...2009_pg7_1