Islamabad, June 26, 2024 – In a significant policy shift, Finance Minister Muhammad Aurangzeb announced on Tuesday that heavy taxes on retailers will take effect from July 1, 2024.
The announcement came as Aurangzeb wrapped up discussions on the Federal Budget 2024-25 in the National Assembly, maintaining higher tax rates on the salaried group and revealing a three-month honoraria for the staff and officers of the National Assembly and Senate.
Aurangzeb emphasized the necessity for retailers to be part of the tax net, advocating for strict measures to ensure compliance. “For non-filers, we have decided to heavily increase tax rates under Section 236G and Section 236H, which will be implemented from July 1, 2024, on all sectors,” he stated.
The finance minister outlined the Budget 2024-25 as a homegrown reform plan designed to steer the country out of its current economic difficulties through comprehensive economic reforms. The government’s primary objectives include increasing the tax-to-GDP ratio to 13%, advancing the privatisation programme, and implementing significant reforms in state-owned enterprises (SOEs) and the energy sector.
Aurangzeb highlighted the government’s shift in focus towards prioritizing the private sector, correcting incentives, and transitioning from a government-led to a market-driven economy. “On the income tax front, before blocking mobile SIMs and banning international travel for non-filers, they will be provided an opportunity for a personal hearing,” he said.
He further detailed that under Section 116, an explanation will be mandated in the declaration of foreign assets and assets of dependent spouses.
Additionally, Aurangzeb confirmed that stationary items would continue to be exempt from sales tax, countering an earlier announcement of an enhanced GST on these items. The current reduced sales tax rate will also persist for Hybrid Vehicles (HEVs) listed in Schedule 8 and Serial No 73. “Under the Export Facilitation Scheme (EFS) 2021, zero rating on local supplies will continue,” he added.
These fiscal adjustments follow the Senate’s Monday session, which produced 128 recommendations to the National Assembly for legal changes and amendments in the Finance Bill, 2024. These recommendations included the restoration of certain exemptions and reduced tax rates on essential commodities, goods, and services. The proposals, developed by the Standing Committee on Finance, were the result of an extensive session held at the Parliament House.
Aurangzeb noted that under Prime Minister Shehbaz Sharif’s directives, the government has sought to protect critical sectors such as agriculture, health, education, and renewable energy. “Time has come to take strict action against retailers who do not participate in the FBR’s Tajir Dost scheme,” he declared.
Moreover, Aurangzeb praised the armed forces, reiterating that national security remains a top priority for the government. He also highlighted positive developments through the Special Investment Facilitation Council (SIFC), citing forthcoming investments from friendly countries, notably Saudi Arabia and the UAE. “We are optimistic about hearing good news in the coming days,” he said.
Addressing the country’s engagement with the International Monetary Fund (IMF), the finance minister expressed the government’s intent to make the forthcoming IMF programme the last bailout needed by the country.
Concluding his address, Aurangzeb reiterated the announcement of a three-month basic pay honoraria for the staff and officers of the National Assembly and Senate, underscoring the government’s commitment to recognizing their service.