ISLAMABAD, June 9: Some tax adjustment proposals have been made in the budget to raise an additional revenue of around Rs44.425 billion.
The proposed taxation measures were taken in income tax, sales tax, customs and federal excise with a view to achieving an ambitious target of Rs1,025 billion set for 2007-08.
However, some relief measures have also been taken particularly for the industrial sector in the shape of zero-rating of sales tax, reduction of customs duty on some raw materials and machinery, which would result in net revenue loss of around Rs9.68 billion to the national kitty.
The government has imposed one per cent surcharge on all imports excluding vegetables, pulses, edible oil, ghee, crude petroleum, furnace oil, HSD, medicines, fertilizers, imports under chapter 99 and temporary imports and levied 25 per cent regulatory duty on export of specified metals and articles thereof.
The duty rates have been increased on import of poultry meat, welded stainless steel pipes etc. Duty rates on vehicles have been increased around the effective rate of CVT, which has been merged in customs duty. For up to 800cc cars there was no CVT, therefore rate of duty against these vehicles has not been changed.
Used car imports for overseas Pakistanis have been restricted for three years instead of earlier five years under the three schemes -- baggage, transfer of residence and gift schemes -- which would substantially reduce the imports of used cars.
The government has proposed withholding tax at the rate of five per cent on purchase of locally-manufactured cars. A separate tax regime for retailers has been introduced in the budget to tap this sector for generating maximum revenue.
Under the regime, the rate of income tax for retailers would be 0.5 per cent, if the turnover is up to Rs05 million; from Rs05 to Rs10 million, Rs25,000 plus 0.5 per cent of the amount of turnover exceeding Rs5 million; above Rs10 million, the income tax rate will be Rs50,000 plus 0.75 per cent of the amount of turnover exceeding Rs10 million.
The government has made withholding tax on non-corporate commercial and industrial consumers of electricity minimum tax liability; withdrew exemption to Mutual Fund on CFS interest income and companies to pay advance tax in the first year of operations.
Filing of wealth statement has been made mandatory for taxpayers having income of Rs500,000 or more and the Commissioner has been authorized to call for the Wealth Statement.
Under the federal excise sector, the existing levy of excise duty at the rate of 5 percent on non-fund banking services is being extended to include all non-fund services except chequebook issuance charges, Umra and Hajj service charges, cheque return charges and utility collection charges.For the facilitation of passengers various levies on international air travel -- excise duty, foreign travel tax and government airport tax -- are being clubbed together in the name of Air Travel Tax (ATT). The rate is same but exemption for passengers coming from abroad is being withdrawn.
Cigarettes are chargeable to excise duty on the basis of retail price. To enhance excise duty collection, the retail price of cigarettes is increased by 7 per cent.
The rate of sales tax on raw materials on import and supply of iron and steel, plastics and paper is being increased from 15 per cent to 20 per cent. The input tax adjustment is being disallowed on supply of utilities (electricity and gas) to the residential colonies of manufacturers. The government also withdrew zero-rating of the chemicals used in other industries excluding the five zero-rated sectors -- textile, carpet, sports, surgical and leather.
Relief measures: Among the relief measures, five sectors -- sewing machines, and bicycles, writing inks and exercise books, retailers and semi-retailers -- were zero-rated. The utility bills of rice exporters have also been zero-rated. The sales tax on uncooked poultry meat has been zero-rated.
The government has exempted locally-produced cotton seed oil and glass bangles of Sindh from sales tax and the scope of sales tax has been extended to two other medicinal items -- surgical tapes and ultrasound gel.
Under customs, five sectors -- gems and jewellery, furniture, marble and granite, horticulture and surgical equipment and medical devices -- have been zero-rated. The duty on broadcasting equipment, particularly of FM radio, has also been reduced to five percent. Similarly, machinery and spare parts of the newspaper industry is either exempted or duty has been reduced.
Poultry feed items, poultry vitamins, evaporation air-coolers, insulted sandwich panels and silos for storage of poultry have been exempted from duty.
