ISLAMABAD: The government has imposed additional taxes worth Rs 223 billion, including a 0.6 percent withholding tax on cash withdrawals from banks, an increase in super tax across the board, and statutory provisions to bring 50 percent of windfall gains into the tax net.
In total, the Federal Board of Revenue (FBR) will receive an additional revenue of Rs 903 billion through the continuation of the tax measures introduced in the Mini Budget last February 2023, taking the full fiscal year to Rs 680 billion. There will be an increase while additional revenue measures will generate 223 billion rupees. .
The FBR has given tax relief of Rs 23 billion on all four taxes, thereby generating a net additional revenue of Rs 880 billion in the next financial year.
To achieve the revenue target of Rs 9.2 trillion in the 2023-24 budget, the government will achieve a nominal growth of 24.3 percent, including a real GDP growth rate of 3.5 percent and an inflation rate of 21 percent. The net additional tax measures last February 2023 will take the tax collection in the next budget to the target level of Rs 7.2 trillion for the outgoing fiscal year. Raise the tax from 5 million a year to $100,000 or its equivalent to cover exchange rate fluctuations. A cash withdrawal of more than Rs 50,000 will add Rs 14 to 15 billion to the national exchequer.
A 2% final withholding tax exemption was announced for non-resident individual POC/NICOP holder on purchase of immovable property where the immovable property is acquired through remittances sent from abroad. 2000 per fan and incandescent bulb at the rate of 20% (as per cost). The scope of FED on services is proposed to be extended by including royalties and fees for technical services.
By withdrawing the exemption, the government imposed an 18 percent sales tax on edible products sold in bulk under brand names or trademarks. The FBR has increased the reduced rate of sales tax on supplies from Point of Sale (POS) Tier 1 retailers dealing in leather and textile products from 12% to 15%. It is proposed to levy 15% service tax in Islamabad Capital Territory (ICT) for electric power transmission. FBR has proposed to increase the withholding tax on foreign payments through credit cards/debit cards. For foreign domestic helpers in Pakistan, FBR has proposed an adjusted advance tax of Rs 200,000 from employers at the time of issue/renewal of work permit.
After announcing the budget, FBR Chairman Asim Ahmed along with his team told a technical briefing at the FBR headquarters on Friday that the super tax will be imposed on all sectors instead of selected sectors. When asked about the correct estimation of revenue through the implementation of windfall gain tax, the chairman replied that only a statutory provision was proposed to get the powers to levy windfall gain tax on the sectors earning extraordinary profits. was He said that they have worked on it but it has not been decided when this tax will be implemented. Rationalization of super tax under Section 4C will be applied to all persons in the board with income above Rs 150 million as additional three new income slabs will be added. 350 million to 400 million rupees, 400 million to 500 million rupees and above 500 million rupees will be taxed at 6 percent, 8 percent and 10 percent respectively.
The government increased the rate of withholding tax by one per cent on supply of goods other than sale of rice, cottonseed or edible oil, subject to a concessional tax rate of 3 per cent on supply of services including but not limited to electronic and print media advertising. EXCLUDING SERVICES AND PERFORMANCE OF AGREEMENTS, EXCLUDING PLAYER. It increased the rate of withholding tax for commercial importers by 0.5% on import of goods falling under Part III of the Twelfth Schedule of the Income Tax Ordinance, 2001. Now this withholding will be 6 percent. The government has not changed the tax rate. 1 percent on capital goods imported by commercial importers. The rate of withholding tax on raw materials imported by industrial establishments will remain at 2 percent. The rate of import of raw materials by commercial importers will also remain at 3.5 percent.
The government has imposed a final withholding tax of 10 percent on the issue of bonus shares by the company and 20 percent for non-filers. FBR has increased the rate of withholding tax on payments to non-residents through debit/credit or prepaid cards from 1% to 5%. and 2 percent to 10 percent for non-filers.
The government did not impose additional tax at the rate of more than 50 percent on the income profits and gains of any individual or class of persons due to extraordinary gains due to external factors. Market vehicles on duty and tax. Earlier it was charged from 1800cc but now duty and tax will have to be paid on older vehicles from 1300cc to 1800cc. The government proposed to increase regulatory duty from 15 to 30 percent on six tariff lines. FBR has proposed to remove 10% regulatory duty on import of second hand garments.
It proposed a 5% RD removal on non-locally produced polyester synthetic yarn. It proposed a change in the definition of smuggling to enable Customs to conduct anti-smuggling operations within the territorial boundaries of the country. Provincial levies and special forces have been proposed to be included in the list of mandatory government agencies to assist Customs in anti-smuggling operations in Khyber Pakhtunkhwa and Balochistan. It is proposed to withdraw the requirement of shop area for tier one retailers. Directorate General of Digital Invoicing and Analysis is proposed to be renamed as Directorate General of Digital Initiatives. The scope of penal action is proposed to be extended from “packs of cigarettes” to “items specified by the Board”.
As per the National Tax Council’s decision to harmonize GST on goods and services, it is proposed to exclude generation, transmission and distribution of electricity from sales tax. cards and boards for printing the Holy Quran, incentives for the pharma sector, manufacturing of solar panels, inverters and batteries, exporters of IT and IT-enabled services, raw materials for diapers, sanitary napkins and adhesive tapes and Customs duty reduced from 10 percent to 5 percent on non-localized (CKD) of heavy commercial vehicles (HCVs). The FBR has increased the rate of withholding tax on supplies, contracts and services by one percent in the budget 2023-24. An enhanced withholding tax of 1 percent will be levied on both companies/associations of persons (AOPs) and individual taxpayers. It suggested that the rate on supply in case of companies be increased from 4 to 5 percent. From AOPs and individuals, the rate of withholding on supplies has increased from 4.5 to 5.5 percent. On contracts, the WHT rate from companies will be increased from 6.5 percent to 7.5 percent. In case of AOPs and individuals, the rate of WHT will be 7 to 8 percent. On services, the rate of WHT will be increased from 8 to 9 percent on services and the rate on AOPs and individuals is proposed to be increased from 10 percent. 11 percent
