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Category: Budget 2021-2022

  • Budget 2021/2022: Duty, taxes abolished on cars up to 850cc

    Budget 2021/2022: Duty, taxes abolished on cars up to 850cc

    ISLAMABAD: The government has announced abolishing duty and taxes on locally manufactured and imported cars with engine capacity up to 850cc to enable low earning families to afford motor vehicles.

    Finance Minister Shaukat Tarin while presenting federal #budget 2021/2022 on Friday announced duty and tax incentives for sale and import of motor cars with engine capacity up to 850cc.

    The finance minister made following announcement:

    Withdrawal of FED and Reduction in Sales Tax on Locally Manufactured cars up to 850 cc: Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly, it is proposed that small cars upto 850 cc capacity may be exempted from levy of FE besides reducing Sales Tax rate from 17% to 12.5% and withdrawing value added tax.

    Exemption from Withholding Tax on Import: It is proposed that no tax may be collected on imports of books, journals, agriculture equipment and motor vehicles in CBU condition upto 850 cc.

    To incentives this sector further additional custom duty and regulatory duty on CBU import of vehicles upto 850cc are being exempted.

    Whereas relief to existing manufacturing industry and new models is also being provided by removing Additional Customs Duty (ACD) and rationalizing the tariff structure.

    Due to these targeted interventions the middle class of this country will be able to afford a car of this specific category and will accrue the benefits of governments flagship projects of “Meri Gari Scheme” which will enable many countrymen who wish to graduate from motorcycle to own their car by providing small car at an affordable price.

    Moreover further incentives in the form of reduction of customs duties are also being provided to electric vehicles for one year to promote the culture of electric vehicle in Pakistan.

    Similarly, keeping in view the changing international motorcycles trend usage of local manufacturing of heavy motorcycles and specific categories of trucks and tractors are also being incentivised by rationalizing the tariff structure.

    Tax Incentives for promoting electric vehicles: To address environmental issues, reduce reliance on gasoline and provide cheaper source of transportation to public, Government of Pakistan is encouraging the manufacture and use of electric vehicles.

    For this purpose, various tax exemptions and concessions are being proposed, which include tax exemption on import of CKD kits for local manufacturing of electric vehicles, reduction in sales tax rate on locally manufactured electric vehicles from 17% to 1%, withdrawal ofvalue addition tax on import of electric vehicles and CKD kits and withdrawal of federal excise duty on 4-wheelers electric vehicles.

  • Budget 2021/2022: Input tax allowed to companies listed on stock exchange

    Budget 2021/2022: Input tax allowed to companies listed on stock exchange

    ISLAMABAD:  The government has announced input sales tax adjustment for companies listed on Pakistan Stock Exchange (PSX) to promote corporatization in the country.

    Finance Minister Shaukat Tarin while presenting federal #budget 2021/2022 on Friday said that relaxation of restriction on input tax adjustment under section 8B of Sales Tax Act, 1990 had been granted.

    He said that removal of restriction on input tax allowance under sales tax law has been a major demand from business community; however, considering the importance of minimum value addition on VAT model, it is proposed to eliminate this restriction on highly regulated corporate sector that is public limited companies listed on Pakistan Stock Exchange.

    This would be a big breakthrough for further corporatization of economy and facilitation of regulated corporate sector.

  • Budget 2021/2022: Turnover up to Rs10 million not required for sales tax registration

    Budget 2021/2022: Turnover up to Rs10 million not required for sales tax registration

    ISLAMABAD: The government has facilitated small businesses and increased the threshold of turnover up to Rs10 million from Rs3 million and they will not be required to get sales tax registration.

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  • Budget 2021/2022: Consumers to get prizes on sales tax receipts

    Budget 2021/2022: Consumers to get prizes on sales tax receipts

    ISLAMABAD: Finance Minister Shaukat Tarin on Friday said that the government will incentivize consumers through a system of prizes on sales tax receipts through an open ballot every month.

    The finance minister while presenting the federal budget 2021/2022 on the floor of the house said that a special cell in FBR had been established comprising experienced retail business experts together with a smart complement of young officers who would be engaged in rolling out this plan and ensure its efficient operations.

    The finance minister said that Pakistan Single Window shall be piloted with the view to operationalise it in the near future. This will bring all activities connected with the clearance of imports and exports on a single portal which would lead to significant reduction in the number of days required for cargo clearance.

    The work on harmonisation of sales tax on services with the provinces is moving apace and would be made fully operational during the year.

    The finance minister said that the system of tax would be simplified through introduction of new simplified tax return forms and new tax code and rules.

  • Budget 2021/2022: Universal Self Assessment Scheme restored; audit cases to be selected on risk-based system

    Budget 2021/2022: Universal Self Assessment Scheme restored; audit cases to be selected on risk-based system

    ISLAMABAD: Finance Minister Shaukat Tarin on Friday announced to restore Universal Self Assessment Scheme (USAS) in actual form to facilitate tax return filers.

    While presenting federal budget 2021/2022, the finance minister said that the lynchpin of economic policy would be resource mobilisation, especially tax revenues. We plan to fundamentally restructure the taxation regime and working of tax administration.

    These initiatives are the need of the hour as there are serious issues of public trust and confidence in our tax system.

    The proposed tax policy will emphasize on expansion of tax bases through identification of new taxpayers, gradual removal of exemptions and concessionary provisions and reduction in tax rates. We would also protect the existing taxpayers so that no further burden is placed on their tax liabilities.

    At the outset our tax policy would be based on the following principles:

    We will restore the purity of self-assessment scheme, which would mean that except when there is any “definitive information” contrary to the information disclosed in a tax return, all tax returns shall be deemed as assessment orders;

    The returns under self-assessment scheme would only be subjected to audit once they are chosen through an automated risk-based selection procedure;

    Furthermore, we would make use of outside auditors for carrying out the audit, which will be done remotely through an e-Audit system;

    These audits would be very serious and wilful evasion shall be considered a criminal offense carrying a jail term;

    We will strive to hit hard on harassment of taxpayers;

    The two taxes; tax on income and tax on consumption, would be the primary instruments of tax mobilisation;

    We will reorient the tax machinery to go after tax evaders, identify those who are outside the tax net when they should be inside, and make extensive use of information technology to detect prospective taxpayers and reach out to them through the use of electronic communications, thereby eliminating personal contact with the taxpayers;

    Progressivity in taxation shall be further strengthened – the rich will be asked to pay their due share in taxes.

    Exemptions available to powerful groups shall be removed;

    No new taxes shall be imposed on the salaried class;

    The system of track and trace will be implemented initially with four industries but would be expanded to the full spectrum of industrial and trading activities;

    A major plank of our strategy would be the expansion of GST base. In this regard, we would bring into the tax net all retail and wholesale transactions which are using emerging and evolving digital and electronic payment systems. To this effect, we would help traders install the point-of-sale (POS) equipment and link it up to the FBR system.

  • Budget 2021/2022: minimum wage increased to Rs20,000

    Budget 2021/2022: minimum wage increased to Rs20,000

    ISLAMABAD: The federal government on Friday presented budget 2021/2022 and announced increase in monthly minimum wage to Rs20,000 from Rs17,500.

    Finance Minister Shaukat Tarin while presenting the budget on floor of the house, announced to increase the minimum wage to Rs20,000 to reduce the burden on lower income group of rising prices.

    The minister also announced increase in pay and pension by 10 percent effective from July 01, 2021.

    He said that the government was aware of high prices and difficulties faced by the lower income group. He said that last year the government had taken austerity measures and due to this increase in salary and pension was not granted.

    He said that the economy had improved now and the government decided to increase the salary and pension by 10 percent.

    He said that from July 01, 2021 all employees of federal government would get adhoc relief of 10 percent. Similarly, pensioners would get increase of 10 percent in their pension from July 01, 2021.

    The government decided to increase integrated allowance for Grade 1 to Grade 5 employees of federal government from Rs450 to Rs900.

  • Govt. presents deficit budget 2021-22 with total outlay of Rs8.4 trillion

    Govt. presents deficit budget 2021-22 with total outlay of Rs8.4 trillion

    ISLAMABAD: The federal government on Friday presented a deficit budget with total outlay of Rs8.4 trillion with host of relief and budgetary measures.

    Presenting the fiscal year budget, Finance Minister Shaukat Tarin on floor of the house said despite the severity of 3rd wave of COVID-19 pandemic, the incumbent government in its third budget made remarkable allocations to carry out out massive development projects and welfare activities for the downtrodden segments of society, besides promoting the agriculture sector to ensure food security and reduce dependence on imports.

    He said the government steered the economy out of crisis and put it on the growth trajectory by pursuing prudent policies under the dynamic leadership of Prime Minister Imran Khan.

    The minister said the country was now out of dangerous situation as the government took initiatives for its economic sustainability as evident from 3.94 percent Gross Domestic Product (GDP) growth rate during the current fiscal year.

    The minister said it was for the first time that any government had to face a critical situation and it successfully put the economy on sustainable growth path.

    He said the Current Account was now $800 million in surplus, as compared to deficit of $20 billion at the end of last government.

    He said the previous governments had also manipulated exchange rate, which had adversely affected the economy, resulting into depletion of foreign reserves to $10 billion.

    However, they increased the reserves by taking loans, which were now being repaid by the incumbent government, he added.

    Tarin said the government had successfully fulfilled all the international commitments, besides putting the economy on growth trajectory. For the purpose, it had to take tough decisions, such as reducing public expenditures and enhancing revenues, he added.

    He said during the current year, the agriculture sector did perform well despite locusts attacks and all the major crops, except cotton, witnessed positive growth.

    Likewise, the services and the large scale manufacturing sectors also had considerable growth despite COVID-19 factor, he added.

    The minister said one of the top priorities of incumbent government was to uplift the downtrodden segments, and for the purpose 40% of the total population was given cash transfers, besides providing relief to 15 million households across the country.

  • Budget 2021/2022: salient features of budgetary measures in Customs Duty

    Budget 2021/2022: salient features of budgetary measures in Customs Duty

    ISLAMABAD: The federal government on Friday presented budget 2021/2022 and announced measures in regime of customs duty.

    GUIDING PRINCIPLES

    (a) Remove anomalies in cascading structure of tariff

    (b) Promote and protect domestic industry by introducing targeted interventions

    (c) Enhance import-substitution by rationalizing tariffs on industrial raw materials / intermediate goods

    (d) Facilitate export-oriented manufacturing by reviewing the existing exemption regimes & export schemes

    INDUSTRIAL RELIEF MEASURES

    1. Reduction / exemption of CD, ACD & RD on import of goods falling under 589 PCT codes to incentivize the textile industry.

    2. Reduction / exemption of CD, ACD & RD on import of flat rolled products of HRC and stainless steel.

    3. Reduction / exemption of CD and ACD on raw materials and intermediary goods and point of sale machines falling under 328 tariff lines as a consequent of tariff rationalization.

    4. To incentivize the pharmaceutical sector and to keep the prices stable in the market, –

     Exemption of CD & ACD on more than 350 APIs

     Plant, machinery and equipment subject to concessionary rate of 5%

     Exemption of CD & ACD on raw material of auto-disable syringes and Reduction in tariff on finished auto-disable syringes

    5. Reduction / exemption on inputs / raw materials of food processing industry.

    6. Reduction of CD & ACD on uncoated paper and paperboard for printing and graphic arts industry.

    7. Reduction / exemption of CD & ACD on Vaccines for veterinary medicines and feed additives to incentivize the dairy sector.

    8. Reduction / exemption of CD & ACD on goods falling under more than 100 PCT codes relating to Tourism industry.

    9. Reduction of duties on raw material/inputs of footwear industry.

    10. Reduction / exemption of CD & ACD on inputs for poultry industry.

    11. Reduction / exemption of CD & ACD on raw material for manufacturer of aseptic plastic packaging.

    12. Exemption of ACD on import of raw materials for cables / optical fiber manufacturers.

    13. Reduction / Exemption of CD & ACD on raw materials for Paint Industry.

    14. Reduction / Exemption of CD & ACD on raw materials for Chemical and Artificial Leather Industry.

    15. Reduction / Exemption of CD & ACD on inputs for Electronics Manufacturing Industry.

    16. Reduction / exemption of CD & ACD on raw materials / inputs of furniture, coating, boiler manufacturing industry, bobbins and cops manufacturing industry etc.

    RELIEF TO COMMON MAN

    17. Reduction of ACD on goods falling under 2436 tariff lines pertaining to 20% customs duty slab from 7% to 6%.

    18. Extension in exemption from customs duties on import of COVID-19 related items for further six month.

    19. Exemption of CD &ACD on Inputs of Ready-To-Use Supplementary Foods (RUSF) and Ready-To-Use Therapeutic Food (RUTF).

    20. Exemption of CD & ACD on 06 life-saving drugs.

    21. Enhance the value of unsolicited gifts through post or courier from Rs.20,000 to 30,000.

    22. Exemption of CD & ACD on import of grain storage hermetic bags and cocoons.

    23. Rationalization of tariff structure on auto sector.

    REVIEW OF REGULATORY DUTY (RD) REGIME:

    24. Rationalization of RD on import of Mobile Phones to encourage import substitution

    25. Increase in rates of RD on import of non-essential / luxury items to support local industry.

    26. Reduction of RD on import of cocoa paste, butter and powder being industrial input goods.

    EXPORT FACILITATION MEASURES:

    27. To ease of doing business, a new Uniform Export Facilitation Scheme is being proposed. The existing schemes shall be phased out in next two years.

    28. Bond to Bond Transfer of goods through WeBOC without prior approval of the Collector is being proposed to be allowed.

    29. Reduction of RD on export of molasses, skin and hides to boost positive image of the country with our important trading partners across the world.

    MISCELLANEOUS

    1. Establishment of Border Sustenance Markets to mitigate the problems faced by the people residing in border areas due to fencing and counter-smuggling measures.

    LEGISLATIVE CHANGES:

    1) Introduction of a concept of Common bonded warehousing to encourage Small and Medium Enterprises.

    2) Empowering Collector of customs to determine customs value there by facilitating trade.

    3) Enabling the Director General Valuation to take appropriate decision on appeal and capping the time limit for such proceedings. Facilitation of trade by avoiding time consumed in unnecessary litigations.

    4) Allowing the importers to amend manifest till berthing event without seeking approval from custom authorities and hence ease of doing business.

    5) Enable customs authorities to allow bonafide amendment in into-bonds goods declaration and thus facilitate trade.

    6) Allowing the Collector to extend warehousing period for six months. Reducing the processing time of the requests and promoting ease of doing business.

    7) Reducing the time limit allowed for decision of the cases wherein the impugned goods are lying at sea ports, airports or dry-ports and thus decreasing the cost of doing business.

    8) Enable customs authorities to issue correction / corrigendum certificate in case of genuine / obvious error and facilitate trade.

    9) Inclusion of other law enforcement agencies for the purpose of reward and increasing their motivation.

    10) Affording opportunity of being heard to the registered users of WeBOC in accordance with the canons of natural justice.

    11) Increasing the period of validity of advance ruling from the current one year to three years in accordance with international benchmarks and facilitating trade thereof.

    12) Provision for the classification committee to avoid unnecessary litigation on account of classification disputes and consequently decreasing the cost of doing business.

    13) Removal of fine in case of delay in filing of goods declaration and thereby providing ease of doing business.

    ENFORCEMENT FEATURES:

    1) Inclusion of master bill of lading and certificate of origin in the existing definition of document to discourage origin fraud.

    2) Inclusion of the retailing in definition of smuggling to discourage retailers from selling smuggled goods.

    3) Making shipping lines responsible for re-export of banned items imported in commercial quantities.

    4) Increasing the pitch of fine in case of non-placement of invoice and packing list in container to inculcate compliance.

    5) Discouraging smuggling by denying release of vehicles used repeatedly for smuggling against redemption fine.

  • Budget 2021/2022: salient features of budget measures in sales tax regime

    Budget 2021/2022: salient features of budget measures in sales tax regime

    ISLAMABAD: The federal government on Friday presented budget 2021/2022 and announced following budgetary measures pertaining to Sales Tax:

    REVENUE MEASURES

    1. The sale of goods through online market place is proposed to be brought into the sales tax net by deeming the online market place as supplier in respect of third party sales through their platform.

    2. For specified goods, it is proposed that it may be made mandatory for manufacturers of such goods to obtain brand license for each separate brand or SKU.

    3. Section 56C provides for prize scheme to promote tax culture. To ensure that the said incentive is not misused, a new sub-section is proposed to be inserted to provide for randomize “mystery shopping”.

    4. The rate of sales tax on potassium chlorate is proposed to be increased from Rs. 80 per kg to Rs. 90 per kg in addition to 17% standard rate.

    5. Zero-rating is proposed to be withdrawn from Petroleum Crude Oil, parts/components of zero-rated plant and machinery, import of plant and machinery by petroleum and gas sector and supply, repair and maintenance of ships.

    6. Sixth Schedule is proposed to be streamlined and exemptions other than relating to basic food items, health and education are proposed to be withdrawn.

    7. Eighth Schedule is proposed to be streamlined and reduced rates other than relating to basic food items, health and education are proposed to be brought into standard regime.

    8. Reclaimed lead and used lead batteries is an unorganized sector. Therefore, entire amount of sales tax in respect of sales of such goods is proposed to be withheld at source under Eleventh Schedule.

    9. To ensure collection of due taxes, sales tax on sugar is proposed to be levied on retail price by including the said product in Third Schedule.

    RELIEF MEASURES

    10. The minimum annual threshold of turnover from all supplies for cottage industry is proposed to be increased from Rs. 3 million to Rs. 10 million.

    11. The threshold of shop area in case of furniture outlet/showrooms is proposed to be increased from 1000 square feet to 2000 square feet for inclusion in tier-1 retailer.

    12. Public limited companies are proposed to be excluded from the purview of section 8B.

    13. A separate section introduced for allowing extension of time for furnishing of return.

    14. Exemption is proposed to be granted to art and printing paper for publication and printing of Holy Quran.

    15. Exemption on import of CKD kits for electric vehicles by manufacturers granted by Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.

    16. To facilitate international athletes, exemption to goods temporarily imported by athletes/sportsmen granted by Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.

    17. Tax exemption to auto disable syringes granted vide Tax Laws (Second Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.

    18. To encourage IT industry in the country, import of plant, machinery and raw material by Special Technology Zone is proposed to be exempted from sales tax.

    19. To facilitate farmers and encourage storage of grain, tax exemption on locally manufactured silos is proposed to be granted till 30.06.2026.

    20. Reduced rate of sales tax @ 1% on locally supply of electric vehicles granted vide Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.

    21. In order to address litigation issue, fixed tax on SIM cards is proposed to be deleted with effect from 1st July, 2020.

    22. Exemption from value addition tax on import of electric vehicles, CKD kits for small car, 2-3 wheelers, HCVs and all these vehicles in CBU conditions was granted vide Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Twelfth Schedule.

    23. For facilitation purpose, the concept of constructive payment is proposed to be introduced in section 73.

    24. To provide relief to the registered persons, the benefit of compensation for delayed payment of refund is also proposed to be extended to those persons in whose case order under section 66 is passed.

    25. For promoting ease of doing business, the concept of Common Identifier Number is proposed to be introduced.

    26. For establishment of Border Sustenance Markets, exemption from sales tax is proposed to be granted on food related and other consumable goods.

    27. In order to introduce umbrella Export Facilitation Scheme by Customs Wing, exemption on import and zero-rating on local supplies in respect of raw materials, components, parts and plant and machinery to authorized exporters is proposed.

    28. Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly it is proposed that small cars upto engine capacity of 850cc may be exempted from value added tax besides reducing sales tax rate from 17% to 12.5%.

  • Budget 2021/2022: salient features of budgetary measures in federal excise duty

    Budget 2021/2022: salient features of budgetary measures in federal excise duty

    ISLAMABAD: The federal government on Friday presented budget for fiscal year 2021/2022 and proposed following budgetary measures pertaining to Federal Excise Duty (FED):

    REVENUE MEASURES

    1. In order to reap reasonable revenue from this sector, federal excise on mobile phone calls exceeding three minutes @ Re 1 per call, SMS message @ Re. 0.1 per SMS, and internet data usage @ Rs. 5 per GB is being proposed. This will result into mild taxation of a broad spectrum of population.

    2. Electronically heated tobacco products are also proposed to be brought into the tax net by inserting new S. No. 8c of Table-1 of the First Schedule to the Federal Excise Act, 2005.

    RELIEF MEASURES

    3. In order to facilitate the people of tribal area and encourage investment and economic growth in these areas, exemption is being given from levy of FED to the industrial units located in FATA and PATA.

    4. The provision to revise return without prior approval of the Commissioner-IR which is available in Sales Tax Act, 1990 is now proposed to be made available in Federal Excise Act, 2005.

    5. Exemption from federal excise duty to 4-wheelers granted vide granted vide Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Federal Excise Act.

    6. The rate of federal excise duty on telecommunication is proposed to be reduced from 17% to 16%.

    7. Payment on account of Merchant Discount Rate (MDR) is proposed to be excluded from the purview of FED.

    8. For establishment of Border Sustenance Markets, exemption from federal excise duty is proposed to be granted on food related and other consumable goods.

    9. Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly it is proposed that small cars upto engine capacity of 850cc may be exempted from federal excise duty.

    10. In order to introduce new Export Facilitation Scheme, 2021, exemption on import and zero-rating on local supplies in respect of raw materials, components, parts and plant and machinery to registered persons is proposed.

    11. Federal excise duty on fruit juices was imposed vide Finance Act, 2019 and resultantly, prices of juices were increased. Moreover due to pandemic, this sector is faced with adverse situation. In order to provide relief to this sector, it is proposed to withdraw federal excise duty on juices.