• No tax on flour, 1,000cc and below cars, medical bills of govt employees, milk, internet & SMS, Tarin tells NA
• Cellphone calls of five minutes or longer duration to have 75 paisa tax

ISLAMABAD: The government has reduced a number of taxes in the Finance Bill 2021-22 to provide relief to people and support agriculture, textile, information technology and other industries.

Taxes have been withdrawn or reduced on the demand of legislators, particularly from the opposition, and the business fraternity.

Now there will be no tax on wheat flour and its by-products, cars of 1,000cc and below, medical bills of government employees, milk, internet, short message service (SMS) and mobile phone sets being used by visually impaired persons.

“We have incorporated demands raised in the parliament and by the business community in the budget to benefit different sectors so that condition of the poor can improve and our economic growth and exports can go up,” Finance Minister Shaukat Tarin said while concluding budget debate in the National Assembly on Friday.

Mr Tarin announced that some changes, proposed in the Finance Bill 2021-22 during a National Assembly session, had been incorporated in it.

Giving details of tax reductions or withdrawal, he said earlier the government had announced tax exemption on cars of 800cc and below but now it had been decided that there would be no tax on cars having 1,000cc and lower capacity.

He said there would be no tax on medical bills of government employees and the tax proposed on provident fund had also been withdrawn.

The minister said 15 per cent tax on milk had also been withdrawn and 25pc tax on real estate investment trust had been reduced to 15pc. Similarly, he said that the income tax, which was increased to 35pc for construction projects, had been reduced to 20pc.

He said demands of oil refineries had also been considered in the final budget so that they could upgrade themselves to meet Euro-5 standards.

Mr Tarin again clarified that there would be no tax on internet and SMS but 75 paisa tax would be charged on mobile phone calls of five minutes or longer duration.

He said the tax on milk had been withdrawn and 17pc tax on gold and silver had been reduced to one per cent and three per cent, respectively. However, he added that 17pc tax would remain in place for the value addition of the precious metals.

“Tax on gold and silver has been reduced while 17pc tax will be imposed on their value addition (jewellery making) because gold and silver ornaments are usually bought by rich people,” he added.

Talking about the poultry industry, the minister said 12pc tax on the industry had been cut down to 10pc and the decision had been hailed by poultry industrialists. Similarly, there would be no tax on imported eggs. The textile industry, he said, was backbone of the country’s economy and therefore on the demand of textile mill owners, 12pc income tax on the industry had been reduced to 10pc.

The minister categorically announced that there would be no tax on wheat flour and the food items in which the flour was used.

He said taxes on medical bills and provident fund of government employees had been withdrawn.

He further announced that taxes initially imposed on IT and e-commerce platforms had also been withdrawn.

“We have completely removed the taxes imposed on registered platforms and reduced them to two per cent for unregistered platforms.”

Third party audit on tax evasion

The finance minister vowed to expand tax net and increase economic growth, saying the government would manage to collect Rs4,700 billion taxes in the current year while the next year’s target was Rs5,800bn.

Mr Tarin said the government was also introducing a new system of third party audit to monitor and assess whether the tax being collected by the Federal Board of Revenue (FBR) from an individual or a firm was justified or not. “This will end discrimination of FBR,” he added.

However, he said, on the recommendations of the audit firms habitual tax evaders could be arrested and sent behind the bars.

The minister said reforms were being introduced in the FBR to end the common compliant of tax payers’ harassment by the bureau officials.

Published in Dawn, June 26th, 2021