Govt drags GST down to 16% | Pakistan Today

Govt drags GST down to 16%

Finance Minister Dr Abdul Hafeez Shaikh announced on Friday a number of tax rationalisation measures including reduction in general sales tax from 17 to 16 per cent, abolition of special excise duty and regulatory duties on the import of 397 items, while the income tax ceiling was enhanced to Rs 350,000 and for wealth tax statement limited was increased to Rs 1 million during the next fiscal year.
The tax rationalisation measures announced in the budget speech also propose amendments in legal provisions to remove arbitrage and ambiguity to increase the tax compliance spur industrial activity and curb the stifling inflation impacting on the economic growth and people. Briefing the media on the taxation proposals after the budget speech, Member Inland Revenue Service of the Federal Board of Revenue (FBR) Khawar Khurshid Butt said that the reduction in taxes would have a negative impact of Rs58.8 billion, while the gain from mobilizing additional resources a gain of Rs31.25 billion would be made during the next fiscal year.
Overall the tax relief would be to the tune of Rs27 billion. However, he said that FBR would be generating Rs50 billion through administrative measures. We would be focusing on tax compliance, improving enforcement in the sales tax regime, monitoring the withholding taxes and stopping evasion and short filing. “This all would be accomplished through improving monitoring, conducting risk based audits and strict enforcement.” The reduction in GST rate by one per centage point alone would cause a revenue loss of Rs 35 billion.
The rate of withholding tax on cash withdrawal would be brought down from 0.3 to 0.2 per cent during next fiscal year. The one-off taxes levied due to floods 15 per cent surcharge on income tax and 1.5 per cent increase in special excise duty would end on June 30, he added. The government has decided to raise the tax-free limit from Rs300,000 to Rs350,000. However incomes above Rs300,000 would continue to be subjected to filing of returns, to institute a culture of compliance.
Nearly 80,000 people would benefit from the proposal. While no wealth statement would be required on incomes upto Rs1 million; at present the threshold is Rs500,000. Submission of National Tax Number and Computerized National Identity Card would be made mandatory for filing wealth tax statements filed through withholding agents. The commercial and industrial consumers having electricity bills over Rs1 million per annum would be mandatory file income tax return.
The rate of tax on asset management companies is proposed to be enhanced from 10 to 20 per cent from next fiscal year. All special excise duties are proposed to be abolished from next fiscal year. In addition, 15 items including surgical tapes, ultrasound gel, diapers for adults, bricks and building blocks, ready mix concrete, computer software, ambulances, fire fighting equipment, waste disposal trucks, lorries, special purposes vehicles and aircrafts out of the list of 46 federal excises are proposed to be removed from the excise law.
It will have a revenue loss of Rs 12 billion during next fiscal year. The regulatory duties on 392 items, mostly edible, out of 397 are proposed to be abolished, limiting these to luxury vehicles, excluding alternate fuel cars, cigarettes, arms and ammunitions, betel nuts and sanitary ware and tiles. This would cause a loss of Rs2.5 billion. The custom duty on 22 essential raw materials for the pharma industry used for producing anti-biotic, anti-allergic, anti-diabetic and TB medicines would be reduced by 5 per cent.
The duty on import of raw material, Sabutol used in butyl acetate industry proposed to be reduced to 5 per cent, similarly glass industry would get concession for two major raw materials mirror backing paint and waste scrap of glass. For incentivising oil and gas exploration duty slashed from 15 to 10 per cent for machinery and equipment import. About 15 components of CNG compressors manufacturing industry and hi-tech car audio manufacturing industry to get concessions. The federal excise duty (FED) on cement would be phased out in 3 years.
A reduction of Rs200 per metric ton (mt) is proposed in the first year and equal reduction of the balance of Rs500 per mt in the next two budgets. The paradigm shift was made as cement is key ingredient for development activity, he said adding that FED on beverages is also being phased out. It is being reduced to 6 per cent this year and would be completely abolished next year. This will cause a loss of Rs800 million next fiscal year.
The revenue loss on account of the above measures would be compensated by removal of selected exemptions and zero-ratings under GST, revision of federal excise structure on cigarettes, revision in rate of tax in lieu of value added tax on commercial importers from 2 to 3 per cent. The exemption of sales tax on bricks and concrete blocks has been with drawn to extend similar treatment with other inputs used in the construction industry.
The zero rated sectors would be paying GST at a rate of 5 per cent on their domestic sales during the next fiscal. The exemption of sales tax on defence stores at import and local supply is proposed to be withdrawn. However, he said that the National Logistic Cell and Frontier Works Organization would continue their exemption from the tax net under the special laws.
Sugar sector had been shifted from sales tax to FED, as sales tax could not be imposed on edible items. FED would be charged on 8 per cent. This would generate Rs1 billion. The upward limit of duty slabs would be revised to increase burden of FED on locally produced cigarettes. FED on filter rods for cigarettes reduced from Rs1 per filter rod to 20 per cent ad val.

Related posts

One Comment;

  1. shayze said:

    it is very helpful in purchase. sales and payment to govt and private sector ,

Comments are closed.