The federal budget 2015-16 announced by Finance Minister Senator Ishaq Dar on Friday seems to be for the landlords and big industrialists as there is nothing for the poor and middlemen except few incentives like removing withholding tax on car registration and aviation industry etc.
The major affected sector in this budget 2015-16 is the corporate sector. The government has dropped a bombshell on it by increasing capital gain tax to 15 per cent from 12.5 per cent for holding securities for less than one year and gain tax from 10 per cent to 12.5 per cent for holding securities between one and two years.
Similarly, for long-term investors who hold 2 to 4 years securities, the government has fixed 7.5 per cent capital gain tax first time. Earlier, these investors were not in this tax net.
The impact of the budget 2015-16 assessed against each head and arrows signify the change. As there is no change in income tax rate except for the lowest slab which was slashed by 2 per cent, the tax incidence for the middle class as a proportion for their income will remain unchanged.
Kitchen budget will increase by rate of inflation and so will be rent, transport, and utilities.
The analysts of different brokerage houses said: “The bourses will open on Monday and the budget reaction would be witnessed on that day. The increase of CGT and gain tax would hurt the rising stocks market.”
According to them, Finance Minister Ishaq Dar has surprised many bankers by announcing collective tax on banks’ gain in 2015-16 budget speech. The government has purposed to get income tax from all banking sector at the rate of 35 per cent.
“In our view, the government has understood that banks are generating money from T-Bills and stocks and now it is passing its profits,” an analyst said.
Presently, tax rate of 35 per cent is applicable to banking companies from all sources except income from dividend which is taxed at various rates from 10 to 25 per cent and income from capital gains which is taxed at the rate of 10 and 12.5 per cent.
According to the finance bill, this arrangement discriminates between different sources of income of banks. Accordingly, rate difference for different sources is posed to be removed and income of banks from all sources is proposed to be subjected to income tax at 35 per cent.
The government has also purposed to impose 0.1 per cent tax on the purchase and sale of future contract in the Pakistan Mercantile Exchange (PMEX). According to the finance bill, the traders are neither filing their returns nor any withholding tax is applicable on these transactions.
The cigarette industry was hurt as the government has purposed to be increased excise duty from 58 per cent to 63 per cent. For making informal sector pay due taxes on cigarettes, adjustable fed is proposed to be levied on filter rods at Rs 0,75 per filter rod.
when was any budget pro-poor ? the real beneficiaries are the rich, businessmen & the elite class. The middle class has almost ben eliminated, which is the backbone of any economy in any country. Middle class has most suffered during the past 7 years, thanks to " democracy".
Comments are closed.