ISLAMABAD, June 22: Finance Minister Ishaq Dar proposed amendments to the Finance Bill on Saturday in an attempt to placate an agitated salaried class as well as to lend legitimacy to some of the government’s hasty steps for implementation of budget proposals.
The implementation of changes in the indirect sales tax and federal excise and customs duties were set aside by the Supreme Court through a judgment the previous day. The court had barred the government from collecting taxes without the parliament’s approval and declared illegal the 1931 law, cited by the government as justification.
In a move to cover up the legal flaw, the Federal Board of Revenue (FBR) has now proposed amendments to the Finance Bill for validating the government’s act of collecting revised taxes soon after the finance minister’s June 12 budget speech. If parliament approves the amended bill, the prices of petroleum products and CNG will go up again.
Ansar Javed, the FBR chairman, told Dawn that the June 21 judgment had enabled parliament to implement the tax laws with retrospective effect. “We have submitted the amendments keeping in view the proposals of stakeholders and legal issues,” he said.
The government has introduced more than 50 amendments to the bill to accommodate some suggestions of parliamentarians and certain industries. However, most of the amendments are meant to improve the language of the draft.
Winding up the budget debate in the National Assembly on Saturday, the minister announced withdrawal and changes in the rates of taxes and duties, including income tax on salary.
RELIEF FOR THE SALARIED: After severe criticism by legislators during the debate, the government proposed came up with new tax slabs for salaried people.
The tax liability of salaried individuals having an annual income of up to Rs2.5 million will remain the same.
The government has withdrawn the tax credit facility for taxpayers as it might have thrown up problems of refund. Now the taxpayers can claim the credit of withholding tax as well as credit for investment.
Instead of heeding to the criticism of its decision to raise the GST rate, it has decided to increase withholding tax on mobile phone users from the existing 10 per cent to 15pc, which will be adjustable against the final income of the taxpayers. However, the users will have to file a tax return for the purpose.
An amendment has made it mandatory for all taxpayers to file wealth statements along with tax returns.
The zero-rating of sales tax has been restored on stationery items, milk, dairy products and bicycles.
The rebate in tax liabilities for teachers and researchers has been reduced from 75 to 40pc.
Similarly, the government has restored exemption from income tax for non-profit educational institutions.
The levy of nine per cent sales tax on supply of natural gas to CNG stations has been validated retrospectively from July 1, 2007.
The rate of additional tax on supply to unregistered persons has been reduced from 2pc to 1pc.
The rental income will be taxed at two withholding tax rates of 10 and 15pc, which will be adjustable at the time of final assessment. Earlier, the rental income tax was not adjustable.
The net income from the property will be taxed following exclusion of repairs, premium paid, local tax, any profit, expenditures etc.
The government has also introduced a minimum fine of Rs500,000 on tax officials who misuse the bank accounts information.
The expenditures of the secret agencies have been exempted from audit by the auditor general’s office.
The government has done away with the earlier fixed rates of tax on channels, cable operators and radio stations and proposed that the Pakistan Electronic Media Regulatory Authority will withhold 20pc of the permission and renewal fees of IPTV, FM radio, MMDS, mobile TV, mobile audio, satellite TV channel and landing rights.
The licensing authority will charge 12pc of the value of a foreign produced film imported for screening and viewing. The tax on foreign dramas will remain Rs100, 000 per episode.
A partial exemption on flying and submarine allowance, which had earlier been withdrawn, has been allowed.
After failing to muster support for the levy of tax on the construction industry, the government has withdrawn the rates of Rs25 per square foot on construction and Rs50 per square yard on the layout or site plan. The proposed amendment says it will be notified later.