ISLAMABAD: The Federal Board of Revenue (FBR) increased the Federal Excise Duty (FED) on cigarettes and air travel for business class and first class, imposed a sales tax on the importation of various types of scrap and also increased the tax on employees and buyers of cars 1600cc and over.
As part of the Finance Bill 2022, the FBR increased the scope of the tax on payments to non-residents and improved the rate from 5% to 10% on offshore digital services.
Each banking company collects an advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has transacted by credit or debit card or prepaid card with a person outside Pakistan at the specified rate. The advance tax collected under this article is subject to review.
As part of the Finance Bill 2022, the RBF has increased the FED on locally manufactured cigarettes by 20 paisa n per cigarette for Tier 1 and 40 paisa for Tier 2. The FED rate is enhanced on club, business and first class air travel from Rs 10,000 to Rs 50,000 and the FED rate is enhanced on telecommunication services in ICT from 16% to 19.5% until harmonizing the GST on services with provinces.
In order to keep drug prices stable in the market and encourage local manufacturing of pharmaceuticals, customs duties were waived on 26 other Active Pharmaceutical Ingredient (API) items.
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FBR Chairman Asim Ahmed and his team told reporters during a technical briefing after the budget was announced in parliament that they had forwarded the package of fiscal measures to the IMF and that discussions with the IMF were continuing for an agreement at the personnel level. Asked about the personal income tax (PIT) reforms agreed with the IMF, he replied that the Minister of Finance should be asked about it. He said the FBR proposed taxation of 75% on direct taxes and the rest on the other three.
The FBR also proposed relief measures of Rs85 billion on which it granted relief of Rs49 billion on the PIT.
The FBR also reduced the number of withholding taxes and abolished withholding taxes on education expenses and machinery on rent.
The FBR has proposed to increase the withholding tax on the purchase of immovable property from a person not on the Active Taxpayer List (ATL) from two to five percent from Rs 20 billion, increased the rate of taxation on the purchase and sale of real estate by the ATL person from one to two percent. , capital value tax at the rate of 1% on foreign real estate of Pakistani residents and an increase in withholding tax on the income of luxury vehicles over 1,600 cc.
The FBR has also imposed 2% on high income earners of all persons including individuals, companies, etc. for income above Rs 300 million and this measure will result in a tax of Rs 38 billion.
The FBR proposed to increase the differential tax on the low ratio of advances on deposits (ADR) of banking income to income attributable to all investments, including treasury bills on ADR, from 40% to 55% , which will bring in 25 billion rupees.
The FBR has increased the import stage income tax rate on imports by commercial importers from 2% to 4%, which will result in an additional tax of Rs 17 billion.
On the direct tax side, the government has taken major tax measures on deemed income at the rate of five percent of real estate such as land or a house of more than 25 million assets. rupees. This measure will bring in Rs 30 billion in revenue in the next financial year.
The FBR has also imposed a fix on retailers other than Tier 1, as retailers will have to pay a fixed tax of Rs 3,000 up to a monthly electricity bill of Rs 30,000, Rs 5,000 on an electricity bill Rs 50,000 monthly, Rs 10,000 up to electricity bill of Rs100,000 and Rs50,000 per month for special classes such as car dealerships and precious watches which will bring additional Rs 30 billion.
The privately funded gratuity and pension scheme allowance of 50% of the employer’s contribution will be subject to income tax and yield Rs 10 billion.
Audit will be done once every four years, Behbood certificate tax reduction from 10% to 5%, exemption for charities/government organizations and reduced rate on IT exports from 0.25%.
The maintenance of 20 per cent RD on the import of disodium carbonate is proposed to protect the local industry. To encourage the supplier industry, the DR has been reduced on the import of carburizing steel from 30% to 20%.
In the major relief measures, the condition of CNIC/NTN in the event of supply to non-registered persons has been removed. Sales tax exemption has been granted on the importation and supply of all types of seeds. The sales tax on tractors at the rate of 5 percent is abolished.
The exemption has been granted on imports by United Nations diplomats/diplomatic missions and privileged persons. The import and supply of solar panels (PV module) has been exempted from sales tax. Goods imported or donated to non-profit charitable hospitals were exempt. In addition, goods supplied to charitable hospitals with 50 or more beds were also exempt from sales tax. Temporary imports were exempted from the sales tax levy.
Made-up jewelry is now subject to a flat 3 percent tax on local sourcing and a flat 4 percent tax on imports. Plant and machinery imported by power generation projects that have entered into an implementation agreement with the GoP have been exempted from sales tax. Rs90 per kg is reduced to Rs60 per kg on potassium chlorate. Import by EPZ was exempt from sales tax. With respect to GST taxation measures, the scope of the additional tax has been expanded to also include non-active taxpayers.
The regime for non-Tier 1 retailers has been streamlined.
Value Added Tax (VAT) has been imposed on scrap compressors, scrap motors and scrap copper cuttings, even when imported by manufacturers.
Copyright Business Recorder, 2022