Gov’t announce measures to facilitate taxpayers, trap evaders

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ISLAMABAD, May 26 (APP): The federal government on Friday
proposed a number of measures to provide relief to existing
taxpayers and also bring tax evaders into net to facilitate smooth
development of various sectors of economy and help achieve higher
economic growth in accordance with the country’s actual potential.
Finance Minister, Senator Mohammad Ishaq Dar while presenting
the federal budget for the fiscal year 2017-18 before the National
Assembly proposed different relief and revenue measures in Income
Tax, Withholding Tax, Sales Tax, Federal Excise Duty and Customs
Duty regimes.
Dar said that the government during past four years continued
structural reforms to devise a effective tax system and through
Media Term Comprehensive Strategy it wanted to take the tax to GDP
ratio up to 15%.
The Minister said that the Corporate Sector tax, which was
being reduced by 1% percent every year since 2013 would be 30%
percent during the fiscal year 2017-18.
In order to promote Islamic Banking, the tax ratio on its
different kinds would be same as is on the conventional banking
sector.
He said that for the encouragement of compliant taxpayers, the
withholding tax on registration on 850 cc vehicles has been reduced
from Rs10,000 to Rs7,500, on vehicles from 851cc-1000cc, the rate
has been reduced from 20,000 to 15,000, on vehicles from 1001-1300
cc, the rate has been reduced from 30,000 to 25,000. However, The
rates for non-filers will remain unchanged, Dar added.
He said that there would be no withholding tax on the vehicles
purchased under Prime Ministers Youth Loan Scheme.
In order to promote relief on education expenses to low income
groups, it was proposed that individuals having taxable income less
upto Rs 1.5 million should be given tax relief equal to 5% of school
fee upto Rs 60,000 per child per annum, he added.

The finance minister said that for the facilitation of
small tax-payers, the threshold for paying advance tax in four
installments on the basis of tax paid for the last tax year,
has been enhanced from Rs 500,000 to Rs.1 million.
He proposed the limit for importing raw material by
manufacturers through exemption from income tax at import
stage is proposed to be enhanced from 110% of the quantity
imported in the last year to 125% of the quantity imported
in the last year.
Dar proposed enhancement of limit on sale promotion
expenses by pharmaceutical to 10% of turnover and also
suggested reduction of withholding tax rates on fast moving
consumer goods from 3.5% to 2.5%. However, there will be no
reduction on the rates for non-filers.
Dar also proposed facility of revision of withholding
tax statement, right of appeal against orders passed due
to non-filing of returns.
Tax credit on enlistment in stock exchange has been
proposed at a rate of 20% for the first two years of enlistment
and at a rate of 10% for the succeeding two years.
Dar also proposed revenue measured to be taken under the
Income Tax law and suggested rates for dividend paid by mutual
funds to be enhanced from existing 10% to 12.5%. He also suggested
rationalization of slab rates for interest income and rationalization
of taxation of capital gain on securities.
Dar suggested extension in Super Tax by one year for the
tax year 2017 and proposed increase in the rate of minimum tax on
turnover from1% to 1.25%.
Withholding Tax at the Time of Collection of Tobacco Cess has
been proposed @ 5%, while taxation of Builders and Land Developers
to bring this sector in to tax net.
The Finance Minister proposed enhancing the rate of
withholding tax on sale of electronic goods to retailers from 0.5%
to 1%.
The Differential Tax rates for non-filers have been proposed
to be enhanced further in order to penalize the persons staying out
of tax net.
Presenting the government proposals on Sales Tax and Federal
Excise Duty, the Minister proposed Withdrawal of extra tax @ 2% on
lubricating oils supplied by Oil Marketing Companies and also
suggested reduction in sales tax on local supply of Hybrid Electric
Vehicles.

Finance Minister proposed automatic stay of the amount of
sales tax involved in an order that is the subject matter of an
appeal till the decision of Commissioner (Appeals) subject to
payment of 25% of the principal amount.
Dar proposed exemption from sales tax on premixes for growth
stunting, withdrawal of sales tax withholding on supplies from
registered to other registered persons, reduction in sales tax on
poultry machinery from 17% to 7% and reduction in sales tax on
certain services.
The Finance Minister also proposed reduction in the rate of
sales tax on multimedia projector from 17% to 10% to promote
education.
Talking about revenue measures, the minister proposed increase
in the rate of Federal Excise Duty on cement from Rs.1/ kg to
Rs.1.25/ kg and sales tax on retail sales of zero-rated sectors from
5% to 6% and levy of sales tax on commercial import of fabrics @ 10%
to provide competitive edge to the local producers of fabrics.
He proposed enhancement of Federal Excise duty on cigarettes,
increase and rationalization of sales tax on steel Sector.
On customs side, the minister proposed introduction of new HS
Code Version 2017 and relief for poultry farming sectors by
withdrawing 5% Regulatory Duty on the import of Grand Parent and
Parent Stock of Chicken and reducing Customs Duty from 11% to 3%.
He proposed that Customs Duty may be reduced on the import of
Hatching Eggs from 11% to 3%.
To give relief to the agriculture sector exemption on customs
duty will extend to new and up to 5-year old and used harvesters so
that their import cost is reduced.
He proposed exemption on the import of Ostriches and also
proposed duty relief on various imports of agriculture inputs and
health sector.
Like previous year, this year as well, government proposed
several measures to provide relief to the industrial sector.
The minister proposed reduction in rates Regulatory Duty of
Aluminum waste from 10% to 5% and levied 5% RD on Metalized yarn
besides reducing customs duty on its vital raw materials from 20% to
11%.
Dar said that the government was taking various steps to
improve the life standard of the middle and lower middle classes.
For promoting production of baby diapers, he proposed
reduction in customs on raw materials, not locally produced, from
16% to 11% and from 20% to 16% for manufacturers of Baby Diapers.
For incentivizing telecommunication sector, he proposed
withdrawal of currently leviable customs duties at the rates of 11%
and 16%, and a uniform rate of 9% Regulatory Duty would be levied on
telecom equipment.
Dar proposed that customs duty on veneer sheets may be reduced
from current 16% to 11%.
He said the current concessionary rate of customs duty and
taxes, which is 50% of the total applicable duty and taxes, will
continue on the import of Hybrid Electric Vehicles (HEVs) up to 1800
CC and 25% concession on total duty and taxes will be available for
vehicles with engine capacity between 1801 and 2500 CC.
He said, Auto Development Policy 2016-17 provides for
incentivizing fully electric vehicles to promote fuel conservation
and arrest environmental degradation. A package for relief in duty
on these vehicles will be announced within three months.
Dar said that the concessions on import of set pop boxes etc
is proposed to be extended till 30-6-2018 and proposed concessionary
rate of sales tax at 5% to be extended till 30-6-2018.