ISLAMABAD: The government has taken measures of around 506 billion rupees, including tax measures of 264 billion rupees and implementation measures of 242 billion rupees in the budget (2021-22) to achieve the target annual rupee of 5.829 billion, including 17% sales tax on crude oil, Federal Excise Tax (FED) on phone calls / SMS messages / Internet data use, 17% sales tax on silver / gold jewelry and 7.5% withholding tax on monthly electricity bill over Rs 25,000 for domestic users not appearing on active taxpayers Lister.
During the technical briefing on the 2021 Finance Bill, which was held at the FBR House, the team of FBR members informed the media that total tax measures have been proposed at Rs 383 billion for 2021- 2022.
The total relief measures amounted to Rs119 billion.
The net impact of the measures amounted to Rs264 billion.
In order to materialize the fixed tax target of Rs 5,829 billion, the RBF will generate Rs 2,182 billion through direct taxes and Rs 3,647 billion in the form of indirect taxes.
The government has reduced the tax rate for capital gains tax on the disposal of securities from 15% to 12.5%; exempt from DE to industrial units located in Fata and Pata; FED exemption on motor vehicles up to 850 cc and reduction of sales tax from 17 percent to 12.5 percent, and elimination of value added tax (three percent) on vehicles with engine up to 850 cc. The RBF will generate Rs 7 billion from the sugar to be a third schedule item and a manufacturer to collect tax on the retail price.
The FBR has taken customs duty measures of Rs52 billion and relief measures of Rs42 billion. The net impact of the customs measures amounted to 10 billion rupees.
Federal sales / excise tax measures amounted to 215 billion rupees, while sales tax relief totaled 19 billion rupees.
The net effect of the sales tax measures amounts to Rs196 billion. The income tax measures were projected at Rs 116 billion, while relief of Rs 58 billion was granted. The net impact of the tax measures totaled Rs58 billion.
Members of the RBF informed that the enforcement measures would generate revenue of Rs 242 billion. They said the government has reduced the monthly electric bill threshold for withholding tax on electricity consumption from 75,000 to 25,000 for domestic users not on the active taxpayer list. Under the 2021 finance bill, it is proposed to withdraw the zero-rating of crude oil, parts / components of zero-rated installations and machines, the importation of installations and machines by the oil and gas sector, and the supply, repair and maintenance of ships. .
The RBF will generate revenues of Rs38 billion thanks to this tax measure.
The FED on mobile calls and SMS @ Re1 per call (call exceeding three minutes) and Re0.10 by SMS will generate an additional Rs70 billion during the next fiscal year.
The FED levy on internet data usage at the rate of Rs 5 per GB will generate additional revenue of Rs 30 billion.
The government has also announced the creation of border subsistence markets for mainly food products.
FBR members said the FBR did not change the income tax brackets for the salaried class and the EDF on cigarettes. However, the RBF abolished the flat-rate taxation of property income and switched to the normal tax system; Reduction of the overall tax on capital gains on the sale of real estate if the capital gain exceeds Rs 20 million, and reduction of the overall tax on interest income, if it exceeds Rs 5 million.
In the current fiscal year, the Tax Laws (Second Amendment) Ordinance 2021 was enacted to implement corporate tax reforms to provide a level playing field for all businesses. .
Some tax credits, concessions and exemptions have been eliminated.
The provisions of the ordinance have been incorporated into the 2021 finance bill, they said.
The government removed 12 withholding taxes, including the collection of tax on the payment of royalties to residents; withdrawal of cash, banking instruments, non-cash banking transactions, collection of income tax from persons paying amounts abroad by means of credit or debit or prepaid cards, collection of travel tax domestic air travel, international air travel, mineral extraction; members through a stock exchange registered in Pakistan, collection of tax on marginal funding by NCCPL, CNG stations, and collection of tax on certain petroleum products. The RBF abolished the 100 percent tax credit for new industrial enterprises if the investment is made through equity or proportional tax credit if the investment is made through equity as well That debt and this measure of corporate sector income will bring Rs 65 billion to the RBF jackpot.
The minimum tax rate has been reduced from 1.5% to 1.25% for all persons, for refineries from 0.75% to 0.5%, fast moving goods sold by integrated retailers of 1.5% to 0.25%, companies in the SEZ from 1.5% to 0% and Special Companies in technological zones (STZ) from 1.5% to 0%.
Switching from low-rate goods (one percent, five percent, 10 percent, 12 percent) to the standard rate (17 percent) of silver / gold jewelry, fattened milk, LNG / RLNG will incur a tax additional 35 billion rupees.
Removing the exemption on imported luxury food items such as cereals, milk and cream, frozen meat and sausages, milk filled at the standard GST rate of 17 percent will bring in Rs 14 billion. On the enforcement side, the FBR placed the master bill of lading and certificate of origin made mandatory in order to discourage concealment.
The RBF has also extended the anti-smuggling regime to retailers.
On telecommunications services, the GST rate is harmonized and reduces the rate from 17 to 16 percent for the capital territory of Islamabad (TIC).
The government granted EDF exemption to industrial units located in Fata and Pata.
Sales tax relief was granted on high quality Holy Quran printing paper and temporary imports by international athletes (SAF Games).
The increase in the turnover threshold for the cottage industry has been raised from Rs3 million to Rs10 million.
The export product of services will be taxed at 1% at par with the goods and this measure will bring Rs5 billion in revenue into the pot.
To discourage “on the money” – an additional criminal tax on the sale of the vehicle will be imposed of Rs 50,000-200,000 based on the capacity of the cars’ engines before registration.
Copyright Business Recorder, 2021