ISLAMABAD: The government has reduced sales tax to one per cent from the existing 17pc on the import of active pharmaceutical ingredients (APIs) besides some other minor amendments to income tax rates in Finance Bill 2022-23.

The amendments were introduced in the National Assembly by Finance Minister Miftah Ismail and State Minister Ayesha Ghaus Pasha. The parliament approved the amendments along with the original draft of the finance bill.

The information technology venture capital companies have been exempted from income tax, while cinemas have been granted a five-year break from paying any income tax across the country.

Families of shaheed of armed forces and the federal government have been exempted from deemed rental income.

A new section has been introduced which empowers the Federal Board of Revenue (FBR) to introduce fixed tax regimes up to Rs200,000 for retailers and services providers in the future. The FBR will now notify the fixed tax schemes through a notification from time to time through a statutory regulatory order.

The government has further included three charitable organisations — Burhani Qazran Hasana Trust, Saifee Hospital Karachi and Saifiyah Girls Taalim Trust — in the second schedule for exemptions from tax.

At the same time, the alternate dispute resolution has also been extended to sales and federal excise duty.

No tax will be charged on the imports of smartphones in CKD/SKD conditions if imported by local assemblers/manufacturers duly certified by Pakistan Telecommunication Authority (PTA) subject to its quota. The facility will further be subject to conditions.

In the sales tax, fat-filled milk was also included in the list of the zero-rated regime. Moreover, local supplies of raw materials, components, parts and plant and machinery to registered exporters authorised under the Export Facilitation Scheme 2021 were also included in the domain of zero-rated regime. The sales tax exempted on local supply of nans and chapatis from all shops.

The sales tax on the local supply of manufactured articles of jewellery or precious metal is fixed at 3pc. However, there will be no input tax adjustment. The rate of tax will be 12.5pc on electric vehicles in CBU conditions of 50 kWh battery or below and 1pc on EV transport buses of 25 seats or more in CBU conditions.

Taxation for salaried class

As per the proposed upward slab, there will be no tax on those earning a salary of Rs50,000. However, for those earning between Rs60,000 to Rs100,000, a tax rate of 2.5pc will be applied. According to FBR calculation, the tax liability of a person earning Rs100,000 will reduce by Rs15,000 per annum.

The tax liability of those who are earning Rs150,000 will remain at Rs90,000 despite changes in the tax rates.

Those salaried individuals who earn Rs200,000 will now pay Rs165,000 per annum in the tax year 2023 against the existing Rs180,000, a decline of RS15,000.

Individuals with a monthly salary of Rs300,000, Rs400,000 and Rs500,000 will now pay an additional tax of Rs15,000, Rs75,000 and Rs110,000 per annum, respectively.

The annual tax payment will increase by Rs385,000, Rs610,000, Rs1.06m, Rs1.510m for those individuals drawing monthly salary of Rs750,000, Rs1 million, Rs1.5m and Rs2m, respectively.

Similarly, the annual payment of tax will increase by Rs2.260m, Rs3.210m and Rs3.585m in the case of monthly salary of Rs3m, Rs5m and Rs10m, respectively.

Published in Dawn, June 30th, 2022

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