A high-level committee of Pakistan’s leading businessmen, tasked with reviewing budget anomalies, has formally recommended lifting the ban on the import of luxury items.
(more…)Category: Budget
This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.
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Key tax measures taken through Finance Bill 2022
KARACHI: A leading chartered accountancy firm has highlighted tax measures taken by the government through Finance Bill, 2022.
According to PwC A. F. Ferguson&Co. the Finance Bill 2022 represents the First Budget of the current coalition government which has been announced in extremely difficult economic conditions. Due to current account deficit and shortfall in local tax revenue, there has been an increased pressure on the government to adopt certain strict fiscal measures. At the same time, due to higher cost of inflation and cost of living, the government is expected to take some concrete economic decisions which could provide relief to the common man. In the above backdrop, the current budget therefore contains certain proposals which are aimed to increase tax revenue in a manner that only the affluent or well to do class of the country is affected and the burden of such taxes is not passed on to the lower strata of society.
READ MORE: FPCCI identifies tax anomalies in budget 2022-2023
Important measures announced by the Government are listed as under:-
1. Poverty Alleviation tax on persons earning income above Rs 300 million at the rate of 2%.
2. General rate of tax on banking companies enhanced from 35% to 45%.
3. Deemed rental income concept introduced to collect 1% tax on Fair market value of certain immovable properties of resident persons situated in Pakistan.
4. Capital gains tax provisions relating to immovable properties situated in Pakistan revamped aiming to collect tax on sale of open plots held for a period of less than six years.
5. Capital gains on immovable properties held outside Pakistan to be taxed at normal rate irrespective of holding period.
READ MORE: Pakistan announces massive tax reduction for salaried persons
6. Capital Value Tax at 1% on offshore assets of resident persons exceeding Rs 100 million and 5% on vehicles valuing more than Rs 5 million.
7. Advance tax from non-filer purchasers of immovable properties enhanced from 2% to 5%.
8. Slab rates for salaried individuals amended to decrease the effect on low-income employees and increasing the incidence on higher income slabs.
9. Withdrawal of tax credits on investments in listed securities & insurance policies as well as deductible allowance on house loans.
10. Minimum tax carry forward discontinued.
11. Interest income on government securities to be taxed at normal rate instead of 15%.
12. Rate of tax on income from Bahbood certificates reduced from 10% to 5%.
13. Tax credit withdrawn on income from export of software and IT services with 0.25% tax on export proceeds of such services.
READ MORE: Pakistan reduces salary tax slabs to 7 in budget 2022/23
14. Commercial importers to be taxed under final tax regime.
15. 10% withholding tax introduced on fees for international money transfer facilitators.
16. The rate of withholding tax on fees for offshore digital services increased from 5% to 10%.
17. CNIC condition for taxable supplies to unregistered persons withdrawn.
18. Definition of resident individual amended to include Pakistani citizens not resident in any other country.
19. Capital gains tax on disposal of listed securities revised with upward impact on holding period of less than one year.
20. Companies and AOPs required to electronically submit details of their beneficial owners.
21. Exemption from Islamabad Capital Territory Sales tax introduced on locally rendered IT and IT enabled services.
READ MORE: Massive cut in subsidies to curtail current expenditures
22. Exception available to listed companies on restriction to claim input tax beyond 90% withdrawn.
23. Further tax under sales tax extended to registered persons not appearing on Active Taxpayers List.
24. Sales tax exemption extended on all books imported and locally supplied.
25. Federal Excise Duty (FED) on tobacco enhanced.
26. Telecommunication services in Islamabad subjected to higher incidence of FED.
27. The concept of essential commodities introduced in Customs law with a proposal to include in the definition of smuggled goods.
28. Sales tax exemption re-introduced on import of machinery, equipment and materials for exclusive use within the limits of Export Processing Zone.
READ MORE: Petroleum levy to generate Rs750 billion
29. Tax amnesties under promotion package of industries withdrawn.
30. Simplified tax regime for retailers and certain service providers introduced.
31. Alternative Dispute Resolution mechanism revamped.
32. Withholding tax on education fees and payments for use of machinery abolished.
33. Reinstatement of withholding tax on remittances through debit or credit cards.
34. Advance tax on registration of vehicles increased.
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FPCCI identifies tax anomalies in budget 2022-2023
KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has identified anomalies in the federal budget 2022-2023.
In a statement issued on Wednesday, Shabbir Mansha, Acting President FPCCI, expressed his profound concerns on the glaring anomalies in the federal budget 2022 – 2023.
“We have noticed anomalies in custom duties, regularity duties, income tax and sales tax,” he added.
READ MORE: Pakistan announces massive tax reduction for salaried persons
Mansha noted that turnover tax of 1.25 percent for traders, distributors and dealers is unbearable as profit margins are barely 2 percent in market sales and the turnover tax will continue to discourage SMEs to be registered in sales tax.
Acting FPCCI Chief pointed out that 4.5 percent withholding tax on local sale; but, normally trade margins are between 2 – 3 percent and there is no way a business can absorb 4.5 percent withholding tax and continue to operate viably. Therefore, sellers find it more viable to buy goods at 20 percent taxes; when accounted for additional duty of 3 percent on commercial importers on top of 17 percent sales tax and delist from the sales tax.
READ MORE: Pakistan reduces salary tax slabs to 7 in budget 2022/23
He demanded that disparities in the rates of sales tax on raw materials at import stage between commercial and industrial importers. The FPCCI chief maintained that under section 8 (b) of sales tax act 1990, input tax adjustment in excess of 90 percent of the output tax is not allowed. This condition should be withdrawn; as the same has been already extended to companies operating in various sectors. Furthermore, withholding tax on import of raw materials should be the same for industrial and commercial importers.
READ MORE: Massive cut in subsidies to curtail current expenditures
Mansha has proposed that at the stage of deregistering from the sales tax system, the condition of prior audit should be withdrawn to facilitate exit after three years; provided a company, individual or association of persons (AOP) was filling a null return for the past five years due to discontinuation of their businesses.
On the withdrawal of NIC condition through amending the section 23(I)(b), FPCCI has appreciated the government; but, maintained that the Finance Bill 2022 should categorically state that no NIC would be required for sales to non-filers.
Mansha also raised the issue of 12 percent tax under section 233(1). Additionally, freight and transportation charges under section 153(1)(b) at 3 percent should only be applied on final tax region.
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Pakistan announces massive tax reduction for salaried persons
KARACHI: Pakistan has announced massive tax reduction for salaried persons in the budget 2022/2023. The country announced federal budget 2022/2023 on June 10, 2022 and announced massive reduction in tax on the income of salaried person, which may be applicable from July 01, 2022.
Through Finance Bill, 2022 the tax slabs have been reduced to seven from 12. Besides, bringing down the number of slabs, the country also provided massive tax relief in payment of tax.
READ MORE: Pakistan reduces salary tax slabs to 7 in budget 2022/23
According to PwC A F Ferguson & Co. the persons falling in various tax slabs will save tax amount in tax year 2022-2023.
Following is the comparison in proposed salary taxes and existing taxes calculated by PwC A F Ferguson&Co.
READ MORE: Massive cut in subsidies to curtail current expenditures
Amount in Rupees
Annual taxable income Existing tax Proposed tax (Saving) / Excess tax 600,000 – – Nil 1,200,000 30,000 100 (29,900) 2,400,000 180,000 84,000 (96,000) 3,600,000 390,000 234,000 (156,000) 6,000,000 895,000 654,000 (241,000) 12,000,000 2,345,000 2,004,000 (341,000) 18,000,000 4,845,000 3,954,000 (891,000) 24,000,000 5,645,000 5,904,000 259,000 The finance bill proposed following income slabs and rate of tax for salaried persons for tax year 2022/2023:
READ MORE: Petroleum levy to generate Rs750 billion
S# Taxable Income Rate of Tax (1) (2) (3) 1. Where taxable income does not exceed Rs. 600,000 0 2. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 Rs. 100 3. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000 7% of the amount exceeding Rs. 1,200,000 4. Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,600,000 Rs. 84,000 + 12.5% of the amount exceeding Rs. 2,400,000 5. Where taxable income exceeds Rs. 3,600,000 but does not exceed Rs. 6,000,000 Rs. 234,000 + 17.5% of the amount exceeding Rs. 3,600,000 6. Where taxable income exceeds Rs. 6,000,000 but does not exceed Rs. 12,000,000 Rs. 654,000 + 22.5% of the amount exceeding Rs. 6,000,000 7. Where taxable income exceeds Rs. 12,000,000 Rs. 2,004,000 + 32.5% of the amount exceeding Rs. 12,000,000.” The existing income slabs and rate of tax for salaried persons:
READ MORE: FBR assigned tax collection target of Rs7 trillion in 2022/2023
1. Where taxable income does not exceed: Rs. 600,000 0%
2. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: 5% of the amount exceeding Rs. 600,000
3. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000: Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000
4. Where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000: Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000
5. Where taxable income exceeds Rs.2,500,000 but does not exceed Rs. 3,500,000: Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000
6. Where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000: Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000
7. Where taxable income exceeds Rs. 5,000,000 but does not exceeds Rs. 8,000,000: Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000
8. Where taxable income exceeds Rs. 8,000,000 but does not exceeds Rs. 12,000,000: Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,000,000
9. Where taxable income exceeds Rs. 12,000,000 but does not exceeds Rs. 30,000,000: Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000
10. Where taxable income exceeds Rs. 30,000,000 but does not exceeds Rs. 50,000,000: Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000
11. Where taxable income exceeds Rs. 50,000,000 but does not exceeds Rs. 75,000,000: Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000
12. Where taxable income exceeds Rs. 75,000,000 Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000]
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Pakistan decides 10% regulatory duty on petrol import
KARACHI: Pakistan has decided to impose regulatory duty at 10 per cent from July 01, 2022.
The country presented its federal budget 2022/2023 on June 10, 2022 and proposed increase on regulatory duty on various imported goods.
READ MORE: Penalty amount revised for late filing income tax returns
The Finance Bill, 2022 suggested levying 10 per cent regulatory duty on import of motor spirit as against existing rate of zero percent.
Experts at PwC A.F. Ferguson Chartered Accountants said that the notifications for amendments relating to regulatory duty and additional duty are yet to be issued. “The comments are based on ‘Salient Features’ issued with the finance bill,” they added.
READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers
The government also proposed increase in regulatory duty from zero per cent to 10 per cent on other paper, paperboard, cellulose wadding and webs of cellulose fibers.
Furthermore, the government planned to increase regulatory duty from 10 per cent to 20 per cent on optic fiber cables.
The Finance Bill also proposed amendments in reduction of regulatory duties, which included:
Regulatory duty has been proposed to be reduced as follows:
Case hardening steel from 30 per cent to 20 per cent
Chrome yellow from 15 per cent to 0 per cent
The Finance Bill proposed reduction / concessions in customs duty:
Customs Duty (CD) leviable on the import of following categories of items / sectors is proposed to be exempted for incentivizing the respective sectors:
READ MORE: Pakistan massively increases taxation on motor vehicles
– Machinery and capital goods for mechanization of farming including machinery pertaining to irrigation, drainage, harvesting, plant protection etc.
– Specified raw materials used for manufacturing of LED lights, LED bulbs (including parts thereof) and brush ware.
– 26 Active Pharmaceutical Ingredients for incentivizing Pharmaceutical manufacturers.
– Raw materials for manufacture of first aid bandages.
– Membranes for filtering / purifying water.
– The drug ‘Grafalon’ and gadget ‘Irisvision’.
– Raw materials of Ivy leaves extract powders.
– Motor spirit.
In addition to CD, Additional Customs Duty (ACD) is also proposed to be exempted on import of the following goods:
– Raw materials imported by paper sizing industry and chlorinated paraffin wax industry and manufacturers of aluminum conductor composite cores.
– Stamping foils for manufacturing of optic fiber cables.
– Aluminum paste and powder imported by the Coating industry.
– Guts, bladders and stomachs of animals.
READ MORE: New rates of capital gain tax on disposal of securities
Reduction in Customs Duty and Additional Customs Duty
CD leviable on import of following goods is proposed to be reduced:
– Specified categories of other woven fabrics and artificial flowers / foliage of other materials imported by manufacturers of footwear.
– High-density fiber (HDF) boards of wood or other ligneous materials
– Specified fibers of polypropylene.
In addition to CD, ACD, leviable on import of following goods is also proposed to be reduced:
– Direct and reactive dyes.
– Glycerol crude and Glycerol for the coating industry.
– Goods pertaining to Aluminum, polymers of ethylene, Biaxially Oriented Polypropylene (BOPP) used by the packing industry.
– Adhesive, Epoxide resins, Filter media/ paper, Non-woven fabric media and Steel plates / sheets of prime quality imported by manufacturers of filters, other than automotive.
READ MORE: Pakistan slaps 45% corporate tax on banks
– Organic composite solvents and thinners imported by manufacturers of Dibutyl Orthophthalates.
– Plywood, veneered panels & similar laminated wood, poly (methyl methacrylate) and cyanoacrylate.
– Flavoring powders for food preparation for snacks manufacturers.
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Penalty amount revised for late filing income tax returns
ISLAMABAD: Penalty amount has been revised for filing income tax returns after due date.
The Finance Bill, 2022 proposed revision in penalty amount for late filing of income tax returns by salaried persons and other taxpayers.
The government presented federal budget 2022/2023 on June 10, 2022 and proposed various amendments to tax laws for ensure documentation and broadening of tax base.
READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers
The Finance Bill, 2022 proposed amendment to Section 182 of Income Tax Ordinance, 2001. According to the amendment penalty amount revised where any person fails to furnish a return of income as required under Section 114 within the due date.
The proposed amendment is:
“Such person shall pay a penalty equal to higher of –
(a) 0.1 per cent of the tax payable in respect of that tax year for each day of default; or
(b) rupees one thousand for each day of default:
Provided that minimum penalty shall be —
(i) rupees ten thousand in case of individual having seventy-five percent or more income from salary; or
(ii) rupees fifty thousand in all other cases:
READ MORE: Pakistan massively increases taxation on motor vehicles
Provided further that maximum penalty shall not exceed two hundred percent of tax payable by the person in a tax year:
Provided also that the amount of penalty shall be reduced by 75 per cent, 50 per cent and 25 per cent if the return is filed within one, two and three months respectively after the due date or extended due date of filing of return as prescribed under the law;
Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122D.
The existing amount of penalty is as followed:
Such person shall pay a penalty equal to 0.1 per cent of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50 per cent of the tax payable provided that if the penalty worked out as aforesaid is less than forty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of forty thousand rupees:
READ MORE: New rates of capital gain tax on disposal of securities
Provided that If seventy-five percent of the income is from salary and the amount of income under salary is less than five million Rupees, the minimum amount of penalty shall be five thousand Rupees:
Provided further that if taxable income is up-to eight hundred thousand Rupees, the minimum amount of penalty shall be five thousand Rupees:
Provided also that the amount of penalty shall be reduced by 75 per cent, 50 per cent and 25 per cent if the return is filed within one, two and three months respectively after the due date or extended due date of filing of return as prescribed under the law.
Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122C.
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Yarn merchants demand removing budget anomalies
KARACHI: Pakistan Yarn Merchants Association (PYMA) has urged the finance minister to remove anomalies in the budget 2022/2023.
In a statement on Friday, Saqib Naseem, Chairman PYMA, Muhammad Junaid Teli, Vice Chairman, Sind & Balochistan region, has drawn attention of Minister for Finance and Revenue, Miftah Ismail over anomalies in Federal Budget 2022-23.
READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers
PYMA office bearers elaborated that Polyester filament yarn (H.S. CODE 5402.3300, 5402.4600, 5402.4700 and 5402.5200), also known as Man-Made Yarn, is the basic raw material for Pakistan’s textile industry.
The share of cotton in global fiber consumption has fallen from nearly 70 per cent back in 1960, to only 27 percent by end 2020. Its place has now been captured by synthetic or man-made yarns.
“A very large SME sector of Pakistan’s textile industry (more than 500,000 looms and knitting machines) consumes Polyester filament yarn. The commercial importers of Polyester Filament yarn act as financiers to this SME sector and entertain the requirements of this SME sector using their own capital and resources,” they said.
READ MORE: Pakistan massively increases taxation on motor vehicles
Saqib Naseem, Junaid Teli added that we have seen in the past that whenever the difference in W.H.T is more than 1 per cent on Commercial Imports v/s Industrial Import, majority imports of Polyester Filament yarn shift towards industrial imports which leads to corruption and misuse of this facility and to the exchequer.
They further said that Polyester Filament yarn falls under the category of Raw Materials (SRO 1125) and in the previous budget FY 2021-22, the G.O.P imposed W.H.T at import stage 1 per cent for industrial importers and 2 per cent on commercial. However, in the Federal Budget 2022-23, the G.O.P has kept W.H.T @1 per cent for industrial imports falling under SRO 1125 whereas commercial importers shall be charged W.H.T @3.5 per cent with M.T.R and @ 4 per cent with F.T.R. Polyester filament yarn tariff already exists in the cascading system of polyester value chain & it is already on the higher side.
READ MORE: New rates of capital gain tax on disposal of securities
Saqib Naseem, Junaid Teli requested Minister for Finance & Revenue, Miftah Ismail to kindly continue with 2 per cent W.H.T with FTR on Commercial Imports on items falling under SRO1125. Furthermore, in view of information from Reliable sources, it has been learned that the government may impose ACD & RD on Polyester Filament Yarn (H.S Code: 5402.3300, 5402.4600, 5402.4700 & 5402.5200).
Since these are basic raw materials of the Textile Industry, therefore we are requesting you not to impose any ACD & RD on these H.S Codes. We would also request you to Rationalize Custom Duty Tariff of POY (5402.4600) & PFDY (5402.4700) @7 per cent instead of present 11 per cent.
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Punjab announces 15% increase in salary
LAHORE: Punjab government has announced an increase of 15 per cent for employees of provincial government.
The Punjab government on Wednesday announced its budget for fiscal year 2022/2023. The finance minister announced an increase of 15 per cent for employees of provincial government. Besides, the provincial government also increased 5 per cent for pension.
The finance minister said that provincial government was well aware of high inflation and difficulties of masses.
About the employees of provincial government, the finance minister said the employees were committed to their jobs.
The minister also announced a special allowance of 15 per cent to the salary of employees of grade 1 to grade 19.
Further, the government also increased the minimum wage from Rs20,000 to Rs25,000 per month.
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Punjab presents Rs3.226 trillion budget 2022/2023
LAHORE: Punjab government on Wednesday presented its budget 2022/2023 with an outlay of Rs3.226 trillion. Presenting the budget, Finance Minister, Sardar Owais Ahmad Khan Leghari said the total volume of the budget is 22 percent more than current fiscal year, out of which Rs1.712 billion have been allocated for Current Expenditures.
He said that total estimated Revenue for next fiscal year is 2521.29 billion rupees, while the province will get over 2020 billion rupees from the Federal Divisible Pool.
The Minister said Rs435.87 billion have been allocated for salaries, Rs312 billion for pensions while Rs528 billion for Local Governments.
The Finance Minister said no new tax has been levied in next fiscal year on account of Sales Tax on Services. He said Stamp Duty ratio has been proposed to enhance from current one percent to 2 percent to raise provincial revenue.
Owais Leghari said 35 percent of the Annual Development Program amounting to 240 billion rupees has been allocated for South Punjab, which will be spent on development projects.
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Sindh announces tax relief measures in budget 2022-2023
KARACHI: The province of Sindh has announced sales tax relief measures in the budget 2022-2023 presented in the provincial assembly on Tuesday.
Sindh Chief Minister Syed Murad Ali Shah announced a number of measures to facilitate taxpayers in payment of sales tax on services.
READ MORE: Sindh increases salary by 15% from July 1, 2022
He said relief to public has been provided by extending existing measure to ensure that relief continues to reach common man. For this purpose;
Exemption from SST is being proposed on toll manufacturing services.
READ MORE: Sindh unveils Rs1.714 trillion budget for 2022/2023
5 per cent reduced SST rate for “Recruiting Agents” will continue for next two years i.e. up to 30th June, 2024. This relief is proposed for Pakistanis aspiring to work overseas.
Services provided by Cable TV Operators are levied at a reduced rate of 10 per cent, the existing relief is proposed to be extended for a further period of two years ending on 30th June, 2024.
Whereas, the following cable TV operators are proposed to be exempt:
a) Cable TV Operators in rural areas under PEMRA License of “R” Category to be exempt from SST till 30th June, 2023.
READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%
The rate of SST on commission charges received by food delivery channels (i.e. Foodpanda, Cheetay Logistics, etc.) from Home Chefs is proposed to be reduced from 13 per cent to 8 per cent for a period of two (2) years ending on 30th June, 2024. This relief is proposed in order to encourage small scale businesses. In all other cases, the services provided or rendered by Commission Agents shall continue to be liable to SST at 13 per cent.
READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023
The existing exemption on health insurance services is proposed to continue further for a period of one year till 30th June, 2023.
GIZ, a German development agency, facilitating development projects in Sindh, is proposed to be granted conditional exemption on Sales tax on services as indirect relief to the Public.