Taxing in tricky ways

[Lahore_Real_Estate]

ISLAMABAD – Playing its magic tricks as usual the Federal Board of Revenue has claimed of providing relief to the lower income groups, but through increasing the tax rates and withdrawal of tax exemptions on score of items, it has ensured that the people as a whole bleed more profusely to advantage of the government.
Among the positive steps the government proposed Friday in its budget statement are reduction in the General Sales Tax (GST) rate by one per cent and enhancement of the minimum income tax level to Rs350,000 from earlier Rs300,000.
The government took revenue generation measures of around Rs33 billion against the given relief of Rs 52.4 billion, therefore, the net impact of the overall taxation measures would translate into Rs21.1 billion loss to the tax department during the upcoming financial year. However, the Federal Board of Revenue (FBR) aims to collect more than Rs50 billion through administrative reforms in the different government departments, withdrawal of tax exemption on different items and increase tax rate on certain items.
The government has proposed to withdraw sales tax exemptions on surgical tapes, ultrasound gel, diapers for patients, bricks and building blocks of cement, computer software, ambulance, fire fighting vehicles, waste disposal trucks, second hand lorries, aircrafts, ships of gross tonnage exceeding 15 LTDs, spare parts and equipment for aircraft, equipment and machinery for air navigation, bulldozers and combined harvesters, CNG kits, cylinders, valves, commercial catalogues, rock phosphates, phosphoric acid and mineral oil. Elimination of exemptions on these commodities would generate Rs7 billion.
The government has also proposed to withdraw sales tax exemptions on defence stores and this move would fetch Rs10 billion in the next fiscal year.
Meanwhile, the upward limit of duty slab to enhance federal excise duty on locally produced cigarettes would be revised and this would generate Rs9 billion. The value addition tax (VAT) levied on commercial importers is being enhanced from two to three per cent, which is levied and collected at import stage and FBR would generate Rs3 billion through this move. The sales tax on sugar at import and local supply stage has been withdrawn and FED at eight per cent is being imposed which would generate Rs1 billion.
The government has proposed rationalising the zero-rate regime to limits its application only to selected sectors and this would give Rs1 billion. Similarly, the FED on filter rods for cigarettes has been rationalised from one rupee per filter rod to 20 per cent added-value and this would generate Rs200 million. The FED on un-manufactured tobacco is being enhanced from Rs5 per kg to Rs10 per kg.