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Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

  • Finance Bill proposes blanket powers to tax machinery: KTBA

    Finance Bill proposes blanket powers to tax machinery: KTBA

    KARACHI: The federal government through Finance Bill, 2021 proposed certain amendments in tax law, which will give blanket powers to tax machinery, said Zeeshan Merchant, President, Karachi Tax Bar Association (KTBA).

    Merchant was addressing at the post budget 2021/2022 seminar held on Thursday.

    “We at KTBA feel that the FBR is actively pursuing the policy to create a friendly relationship between the taxpayers and the tax collectors,” he said, adding that we feel certain amendments proposed in the law have given blanket powers to the tax machinery.

    Merchant said that the government had presented the budget, which had ingredients of both a sense of direction though based on certain assumption and some measures to increase the tax base.

    KTBA president said that the bar was grateful to the government for timely action taken after the issues highlighted by the KTBA and now it is heard that certain proposed amendments would have now be drafted.

    While discussing the budget, he said that senior citizens had not been taken care of and they were treated at par with normal taxpayers.

    He said that the bill had proposed to omit section 114A of the Income Tax Ordinance, 2001. But it should be clarified by the tax authorities that nothing requires to be done in this regard.

    He said that the discretionary power had been give to assistant commissioner to arrest a person for concealment of assets.

    Zeeshan Merchant said that nothing has been done to bring retailers into the tax net like an effort has been made in SMEs sector.

    He highlighted that the budget had some positive measures, included: increase in minimum tax threshold from Rs10 million to Rs100 million; reduction in minimum tax rate from 1.5 percent to 1.25 percent; minimum tax not to levy in case of losses; distributors brought in the fold of minimum tax; exemptions allowed for those availing tax credit; separate tax regime for SMEs.

  • Finance Bill 2021: tax treatment of capital gain on disposal of immovable properties

    Finance Bill 2021: tax treatment of capital gain on disposal of immovable properties

    KARACHI: The Finance Bill 2021 has proposed various changes to Income Tax Ordinance, 2021 to capital gain tax on disposal of immovable properties.

    In its commentary on budget 2021/2022, KPMG Taseer Hadi & Co. Chartered Accountants said that taxation of gain on disposal Gain on disposal of immovable property is currently taxable on separately provided slab rates by computing the such gain on the basis of holding period as envisaged under sub-sections (1A) read with (3A) of section 37.

    The Finance Bill 2021 proposes to provide for taxability of gain on disposal of immovable property where such gain exceeds Rs. 5 million as normal capital gain subject to tax under applicable tax rates provided under normal slab rates or corporate tax rates.

    However, benefit of holding period shall still be taken into account while computing the taxable capital gain.

    Amendment has also been proposed to tax this gain at 5 percent instead of existing slab rates varying from 2.5 percent to 10 percent. Thus, the gain below Rs. 5 million computed by taking benefit of holding period shall be subject to tax @ 5 percent.

    The Finance Bill also proposes to insert explanation in sub-section (1A) of section 37 that where a person purchases and sells immovable property in the ordinary course of business, such gain shall be taxable as business income and not as capital gain.

    This fiction has always remained subject matter of dispute though eventually decided by the court upholding the stance of tax authorities that such gain should be taxed as business income.

    Currently under section 37(4A) where a capital asset becomes the property of the person inter-alia through gift, the fair market value of the asset, on the date of its transferor acquisition by the person shall be treated to be the cost of the asset.

    This historically as bestowed two-pronged benefits i.e. exempting gain on such disposal from tax in the hands of transferor and simultaneously entitling the transferee to a revalued cost to be claimed as deduction on subsequent sale.

    The bill proposed that if the capital asset acquired through gift is disposed of within two years of its acquisition and the Commissioner is satisfied that this constitutes a tax avoidance scheme then the recipient of the gift shall be treated to have acquired the asset for a cost equal to the cost for the person disposing the asset i.e. the historical cost.

  • Highlights of relief in duty, taxes for import, local supply of cars

    Highlights of relief in duty, taxes for import, local supply of cars

    KARACHI: The government has proposed relief in duty and taxes on import and local supply of motor cars up to 850CC in order to enable lower income group to purchase the motor vehicles.

    According to a commentary on budget 2021/2022 issued by KPMG Taseer Hadi & Co. Chartered Accountants, in recent years, the prices of automobiles in Pakistan have seen a sharp rise due to multiple factors, making them unaffordable for common man.

    The Finance Bill 2021 proposes to rationalize the tariff structure of the automobile sector in order to address this matter in the following manner:

    For motor vehicles up to 850cc, the Bill proposes to abolish import taxes including minimum value addition tax. In the case of locally manufactured vehicles with engine capacity upto 850cc, the Bill proposes to reduce sales tax from 17 percent to 12.5 percent and abolish federal excise duty.

    In case of local supply of locally manufactured Electric Vehicles (EV) i.e., small cars or SUVs with battery capacity up to 50 kwh and Light Commercial Vehicles(LCV)with battery capacity up to 150 kwh, the Finance Bill 2021 proposes to levy sales tax at reduced rate of 1 percent whereas import of the same is excluded from minimum value addition tax with 25 percent reduction in custom duty till 30.06.2026.

    However, import of CKD kits for these EVs is proposed to be taxed at reduced customs duty rate of 1 percent with exemption / exclusion from chargeability of sales taxand minimum value addition tax.

    In addition, the Bill proposes to reduce sales tax on Hybrid Electric cars with capacity up to 1800 cc to 8.5 percent.

    The Bill further proposes to reduce levy of minimum tax on turnover from 1.5 percent to 0.25 percent in case of persons engaged in sale and purchase of used vehicles while also abolishing withholding of income tax on purchase of used vehicles from general public.

    However, the collection of advance tax is proposed to be made from the original purchaser who sells it without registration, at the rates ranging from Rs. 50,000 to Rs. 200,000.

  • Additional withholding tax imposed on cars sold without registration

    Additional withholding tax imposed on cars sold without registration

    KARACHI: The application of withholding tax on cars / motor vehicles that are sold without registration shall pay additional withholding income tax.

    According to the Finance Bill, 2021 the withholding tax in addition to registration/transfer would be applicable and the same would be collected by the motor vehicle registration authority of Excise and Taxation Department if manufactured motor vehicles sold prior to registration by the person who originally purchased it from the local manufacturer.

    Tax analysts at KPMG Taseer Hadi Chartered Accountants said that Tax Laws (Amendment) Ordinance, 2021 inserted sub-section (2A) in Section 231B, whereby, every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax at the time of sale of such vehicles from buyers of locally manufactured vehicles who sell the vehicles within 90 days of taking delivery from the local manufacturers/assemblers, whether or not registered by the respective authorities.

    The rates of withholding tax on motor vehicles sold prior registration are:

    Up to 1000CC: Rs50,000

    1000CC to 2000CC: Rs100,000

    2000CC and above: Rs200,000

    The tax analysts said that above rates were applicable till June 30, 2021.

    However, the Finance Bill, 2021 proposed to continue the provision. However, the restriction of 90 days is proposed to be done away with.

  • Telecom sector gets relief measures in budget 2021/2022

    Telecom sector gets relief measures in budget 2021/2022

    ISLAMABAD: The telecommunication sector has received several relief measures in the federal budget 2021/2022 that will help new investment in this sector.

    According to budget commentary released by KPMG Taseer Hadi & Co. Telecommunication is one of the largest service sectors of Pakistan contributing substantial revenue in the form of taxes on telecom services and income tax on profits.

    The Finance Bill 2021 proposes several relief measures for this sector, some of them were being demanded for long, such as grant of ‘industry’ status for tax purposes.

    These measures will help to attract investment in telecom infrastructure and reduce the cost of doing business and consequential relief to the public.

    Following tax relief measures are proposed for this sector:

    —Grant of industry status which will resolve several anomalies in taxation of this sector. Also, it will make it possible for telecom companies to import plant and machinery without collection of advance tax after obtaining exemption certificate from the Commissioner.

    —Reduction in rate of withholding tax on receipts from 8% at present to 3%. As the said tax is also minimum tax, this will entail a reduction of 62.5% in effective tax rate on income for those with low profits.

    —Reduction in rate of federal excise duty on telecom services from 17 percent to 16 percent. This will however only be relevant for services rendered in Islamabad as services rendered in provinces are subject to provincial sales tax.

    —Abolition of fixed sales tax on SIM cards. However, this will not affect existing cases in litigation.

  • Penalty imposed for non-declaration of business bank account

    Penalty imposed for non-declaration of business bank account

    ISLAMABAD: The Federal Board of Revenue (FBR) has been authorized to impose penalty on taxpayers who fail to declare their bank accounts.

    According to budget 2021/2022 commentary issued by KPMG Taseer Hadi & Co. the Finance Bill 2021 proposed a new definition of “business bank account” to mean a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.

    The form under section 181is available on IRIS wherein the taxpayer is required to declare bank account which would be treated as business bank account.

    The Bill proposes to beef-up the documentation of taxpayer by prescribing specific penalty and prosecution provisions on non-declaration of bank account.

    Where any person fails to declare business bank account(s), in his registration application or fails to amend his registration profile to declare existing business bank account(s), such person shall pay a penalty of Rs. 10,000 for each day of default since the date of submission of application for registration or date of opening of undeclared business bank account whichever is later subject to minimum penalty of Rs.100,000 per undeclared bank account. This provision is proposed to be effective from 1st October 2021.

  • Sindh announces 20 percent increase in salary

    Sindh announces 20 percent increase in salary

    KARACHI: The Sindh government on Tuesday announced a 20 percent increase in basic salary of all government employees.

    Sindh Chief Minister Syed Murad Ali Shah while presenting the provincial budget 2021/2022, said that the output of the government is directly related to the performance of every individual employee.

    For next financial year 2021/2022, the government is proposing an increase on 20 percent in the basic salary of all employees.

    For the welfare of the labor class and in line with increase in pay of government employees, the minimum wage rate is also being increased from Rs.17,500 to Rs.25,000 per month

    In order to remove discrepancy and bridge the gap between gross salary and minimum wages i.e Rs.25,000, a Personal Allowance is proposed for employees of Government of Sindh in BPS-01 to BPS-05. The fixed rate of Personal Allowance will be as under

     BPS-01 Rs.1900/- per month

     BPS-02 Rs.1500/- per month

     BPS-03 Rs.900/- per month

     BPS-04 Rs.250/- per month

     BPS-05 Rs.250/- per month

    Moreover, 10 percent increase in pension is also proposed for next financial year 2021-22 for employees of Government of Sindh

  • Sindh presents Rs1.477 trillion budget for 2021/2022

    Sindh presents Rs1.477 trillion budget for 2021/2022

    KARACHI: Chief Minister Sindh Syed Murad Ali Shah on Tuesday presented provincial budget for fiscal year 2021/2022. The total outlay of the budget is Rs1.477 trillion with a deficit of Rs25.7 billion.

    The provincial government announced an increase of 20 percent in government employees and 10 percent increase in pension. Besides, minimum wage has been increased to Rs25,000 from Rs17,500.

    Murad Ali Shah said that the total budget outlay for financial year 2021-22 has been estimated at Rs.1.477 trillion, as against budget estimate of Rs.1.241 trillion for the outgoing financial year, showing overall increase of 19 percent.

    The current expenditure of the province is projected at Rs.1.14 trillion, which includes current revenue expenditure of Rs.1.089 trillion and current capital expenditure of Rs.59.49 billion.

    “This is 78 percent of total expenditure of the province and shows an increase of 14 percent over estimates of Rs.1 trillion for last year,” he said.

    It is important to highlight here that for the next financial year; the provincial government has tried to align development as well as non-development expenditure priorities in line with the post COVID-19 situation, he added.

    The chief minister said that the total receipts of province for Financial Year 2021-22 have been estimated at Rs.1.452 trillion as against budget estimate of Rs.1.22 trillion for CFY, showing overall increase of 19 percent.

    Receipts from Federal Government on account of revenue assignment, straight transfers and grants are estimated at Rs.869.68 billion, which constitute 72.5% of total receipts of the province.

    It is an increase of 12.6%, over estimates of Rs.760.3 billion last year. However, the budget estimates of straight transfers for next FY have decreased substantially by approximately 20.6% to Rs.49.5 billion from the budget estimates of Rs.62.34 billion of current financial year. Receipts of Federal PSDP are estimated at Rs.5.37 billion. Receipts on account of Foreign Project Assistance (FPA), budgetary support loans and grants are estimated at Rs.71 billion. Receipts from provincial own sources on account of tax and non-tax receipts are estimated at Rs.329.033 billion, which constitute 27.5% of total receipts. This is an increase of 4.8% over estimates of Rs.313.4 billion of CFY.

    The development expenditure of the province is estimated at Rs.329.032 billion, which include Rs.222.5 billion for Provincial Annual Development Plan (ADP) and Rs.30 billion for districts ADP, foreign project assistance of Rs.71.16 billion and Rs.5.4 billion from Federal PSDP Grant for schemes being executed by the government of Sindh.

    Murad Ali Shah said that in financial year 2021-22, around 1033 schemes have been identified for completion in first and second quarter and maximum resources will be provided for their timely completion.

    On-Going schemes with remaining throw-forward up to Rs.100 million have been fully funded for completion by June, 2022. On-Going Schemes where 70 percent expenditure is made have been fully funded for completion by June 2022.

    He said that the output of government is directly related to the performance of every individual employee. “All the employees of the provincial government have my gratitude,” he added.

    For next financial year we are proposing an increase on 20 percent in the basic salary of all employees. For the welfare of the labor class and in line with increase in pay of government employees, the minimum wage rate is also being increased from Rs.17,500 to Rs.25,000 per month

  • Punjab allows stamp duty incentive worth Rs40 billion to promote construction sector

    Punjab allows stamp duty incentive worth Rs40 billion to promote construction sector

    LAHORE: The Punjab government has granted an incentive in stamp duty worth Rs40 billion during fiscal year 2021/2022 to encourage new investment in construction sector.

    The provincial government announced incentives at the budget 2021/2022 that was presented on Monday.

    The provincial minister announced tax concessions worth Rs50 billion during the fiscal year starting from July 01, 2021.

    The minister said that an amount of Rs40 billion would be granted as tax incentive for construction sector during the next fiscal year. This concession would be available by maintaining stamp duty at one percent during the next fiscal year.

    The provincial government decided to continue reduced rate of sales tax on services from 16 percent to five percent during the next fiscal year. The reduced rate of sales tax would be available on services included small hotels, guest houses, marriage halls, lawns, caterers, IT services, tour operators, jims, property dealers, rent a car service, cable tv oprators, treatment of textile and leather, commission agent of commodity operation, auditing accounting and tax consultancy services, photography and parking services etc.

    In addition to mentioned above services, the provincial government decided to add more 10 services into reduced rate of tax regime. The government allowed reduced rate of sales tax on services from 16 percent to 5 percent to beauty parlor, fashion designers, home chefs, architects, laundries and drycleaners, supply of machinery, warehouse, dress designers and rental bulldozers etc.

    The government decided to reduced sales tax rate from 19 percent to 16 percent on call centers.

  • Punjab allocates Rs560 billion for annual development program

    Punjab allocates Rs560 billion for annual development program

    LAHORE:  The Punjab government has allocated Rs560 billion for Annual Development Plan (ADP) for fiscal year 2021/2022, which is 66 percent higher when compared with Rs337 billion of the outgoing fiscal year.

    The provincial government issued following details related to allocation for the development projects:

    Housing and Public Health Engineering

    • Waste water treatment plant at Babu Sabu Lahore – Rs35.1 billion
    • Provision of clean drinking water through Punjab Aab-e-Pak Authority to more than 70 million population in all districts of Punjab – Rs11.6 billion
    • Construction of flyovers and underpasses in Lahore – more than Rs10 billion

    Irrigation

    • Construction of Jalalpur Canal – Rs32.72 billion
    • Remodeling of SMB Link Canal & enhancing capacity of Mailsi Syphon – Rs 4.03 billion
    • Disaster & Climate Resilience project – Rs10.7 billion
    • Trimmu Brrage, Punjnad Headworks – Rs16.8 billion

    Social Welfare & Bait ul Maal

    • Panagahs at all divisional headquarters in Punjab – Rs793 million
    • Violence against women centers at DG Khan, Rawalpindi and Lahore – Rs425.5 million
    • Disabled person management information system – Rs196.4 million

    Public Private Partnership Projects

    • Lai Expressway, Rawalpindi to Islamabad – Rs55 billion
    • Okara – Satgara – Syedwala – Jaranwala – Chak Jhumra Expressway Road – Rs25.4 billion
    • Sialkot Ring Road – Rs15.9 billion
    • Installation of Water Meters in Lahore – Rs10.4 billion
    • Multan Vehari Road – Rs12.01 billion

    Forest

    • Ten billion tree Tsunami Program (Phase – I) – Rs13.1 billion
    • Establishment of Dargai Gill Gorest Park – Rs398 million
    • Development at Pabbi National park – Rs150 million

    Law & Order and Emergency Services

    • Prison Management Information System for all prisons – Rs290 million
    • Rescue 1122 Service in all Districts of Punjab – Rs683 million
    • Motorbike Ambulance Service in remaining 27 districts of Punjab – Rs984 million

    Transport

    • Procurement of 200 Eco friendly urban buses for major cities of Punjab – Rs3.4 billion
    • Construction of 200 bus stops/shelters including bus information system in Lahore – 498 million
    • Centralized Auomtaed Fare Collection and Bus Scheduling System – Rs312 million

    Energy

    • Renewable energy sector program – 12.86 billion
    • Establishment of Punjab Grid Company
    • Punjab Ujala Program for School Solarization – Rs1.53 billion
    • Solarization of 303 schools (for differently abled children) – Rs250 million

    Enivornment

    • Installation of air quality monitoring system across Punjab
    • Installation of water quality monitoring system across Punjab

    Agriculture & Food Security

    • Punjab irrigated agriculture productivity improvement – Rs41.7 billion
    • National program for improvement of watercourses phase – II- Rs18.33 billion
    • Agriculture Transformation plan – Rs51.9 billion]
    • Subsidy of Agriculture inputs – Rs4 billion