ISLAMABAD – In an effort to reduce the fiscal deficit as per the International Monetary Fund’s conditions to secure a bailout package, the federal government has put an additional tax burden on the existing taxpayers.
Instead of broadening the tax bases, the government has enhanced taxes on the upper-middle-income and the higher income groups to generate additional revenue to the tune of Rs215 billion during the forthcoming financial year.
The government has imposed a 35% tax on the monthly income of over Rs500,000. Prior to the amendment in the Finance Act, the maximum rate was charged on the monthly income of Rs1 million.
The government has linked the sale and transfer of properties with payment of 5% deemed income tax. It has also linked the exemption from the deemed income tax for certain properties with a person’s status as an active taxpayer. Every asset of a non-filer will be subject to 5% income tax, regardless of the value of the asset.
A new advance tax has been introduced for the construction, development and disposal of commercial and residential buildings.
Through an amendment to the Customs Act, the government has waived duties on the import of household goods for the employees of Reko Diq Mining Company (Private) Limited.
The government has also made changes in the sales tax law, primarily increasing the tax rate. The additional sales tax on supplies has been increased to 4% for non-registered persons. As such, the total sales tax will now be 22% for a majority of businessmen. The government has imposed 18% tax on the sale of DAP fertiliser.
The federal government has amended the Petroleum Products (Petroleum Levy) Ordinance, Members of Parliament (Salaries and Allowances) Act and Public Finance Management Act. Now, the petroleum levy can be increased to Rs60 per litre. The recent amendments also increased perks and privileges of the parliamentarians. Now chairpersons of standing committees of the National Assembly and the Senate are entitled for1,200cc to 1,600cc cars.
Through other amendments, the government has extended the facility of staff-driven cars to the heads of standing committees for their journey outside the federal capital. Currently, they are required to hire private drivers in case of movement out of Islamabad in an official vehicle. The government will pay for the remuneration of drivers.
According to the old law, the chairpersons were responsible “for the restitution of any damage caused to the official car in the event of any accident that occurs during journey outside Islamabad”. Now, this condition has been deleted and the exchequer will pay for the damage.
