Pakistan Continues Tax Exemptions for Hybrid Vehicles in 2024-25

Pakistan Continues Tax Exemptions for Hybrid Vehicles in 2024-25

The federal government has decided to maintain tax exemptions on hybrid vehicles and stationery items in the upcoming 2024-25 budget.

Finance Minister Muhammad Aurangzeb, while addressing the National Assembly, emphasized the government’s commitment to public interest by accepting Senate recommendations and making adjustments to the proposed budget.

Aurangzeb confirmed that the existing reduced tax rates on hybrid vehicles will remain unchanged. Additionally, the Export Facilitation Scheme 2021 will continue to offer zero rating for local suppliers.

Addressing concerns related to tax compliance, the minister outlined that non-filers will be personally heard before any actions such as blocking SIMs or restricting foreign travel are taken.

In a bid to streamline tax processes, the finance minister announced several changes. The default surcharge rates for income tax, sales tax, and federal excise duty will see an increase to either 3 percent or 12 percent, whichever is higher.

However, the fine for late filing of income returns will not increase if the filer has previously filed returns on time at least once in the past three years.

Aurangzeb also extended the deadline for transfer appeals from income tax commissioners to appellate tribunals from June 16, 2024, to December 31, 2024.

Proposed amendments to Section 25 of the Sales Tax Act, 1990, will be reviewed, and the government is considering maintaining sales tax exemptions for charity hospitals and income tax rebates for professors.

The finance minister highlighted the government’s efforts to curb inflation, noting a significant reduction from 38 percent to 11.8 percent, with food inflation dropping to 2.2 percent in May. He reiterated the government’s commitment to further reducing inflation through ongoing measures.

In the Public Sector Development Programme (PSDP) for the next fiscal year, priority will be given to ongoing projects, which will receive 81 percent of the development resources. Out of the Rs1500 billion PSDP budget, Rs350 billion has been allocated for public-private partnership projects.

Aurangzeb assured the National Assembly that the armed forces’ needs will be fully met, emphasizing that national security remains a top priority.

He also outlined the government’s home-grown reforms, aimed at increasing the tax-to-GDP ratio to 13 percent, reforming state-owned enterprises (SOEs), and enhancing public-private partnerships and the energy sector.

The finance minister expressed the government’s dedication to reducing the fiscal deficit by increasing revenues and cutting unnecessary expenditures.

A committee under his leadership has been formed to present recommendations on simplifying government operations, which may include merging ministries or devolving them to provincial authorities.

Pension expenditures will be reduced through upcoming reforms, and the digitization process of the Federal Board of Revenue (FBR) is being accelerated, with Rs7 billion allocated for this purpose. Starting July 1, strict actions will be taken against retailers failing to register with the FBR’s ‘Tajir Dost Scheme’.

Deputy Prime Minister Ishaq Dar noted that presenting budget recommendations to the National Assembly is a constitutional obligation of the Senate, a tradition upheld for many years. He stressed that the Finance Bill must be laid before the Senate, although its approval is the prerogative of the National Assembly.

During the budget debate, various leaders expressed their views. Sunni Ittehad Council chief whip Aamir Dogar criticized the budget for not providing relief to the business and salaried classes, particularly in the agriculture sector.

PMLN’s Shahid Usman Ibrahim defended the budget, stating it was designed to navigate the country through difficult economic conditions. He highlighted the potential of the agriculture sector to generate significant revenue with farmer-friendly policies and noted the notable reduction in inflation.

Overall, the decision to maintain tax exemptions on hybrid vehicles reflects the government’s ongoing commitment to promoting sustainable transportation and environmental conservation.

By making eco-friendly vehicles more affordable, the government aims to encourage more consumers to switch to hybrid vehicles, contributing to a cleaner and greener Pakistan.