30 new tax measures on the cards
ISLAMABAD: The government is going to take 30 new tax measures in budget 2014-15 to be announced today (Tuesday) through Finance Bill 2014.
Two commissions will be formed with a mandate to give proposals within six months for scaling down sales tax rate to single digits and changes in the field formation of the income tax department.
The first commission on sales tax will review various options for reducing sales tax rate to 5-7 per cent. However, the decision may be taken in budget 2015-16.
The second commission will be announced on the changes in the field formation of the income tax department. It will give a report to revert to the circle-based system of income tax against the current functional lines.
As per tax proposals, the federal excise duty (FED) rate will be enhanced to 17pc from existing 16pc across the board on all existing excisable products; the government will introduce electronic volume tracing to collect sales tax and excise duty on the basis of actual production of items such as beverages, ghee/cooking oil, fertilisers, etc.
The FED on cigarettes will be raised to 65-70pc from 55pc. The government is planning to abolish ‘capacity tax’ on beverages and introduce revised rates of FED and sales tax on beverage sector from the next fiscal year.
It has also been proposed to increase FED rate on international air travel by replacing fixed FED rates with the proposed standard rate of 17pc on tickets issued to passengers travelling abroad.
The 17pc FED will be imposed on chartered flights used by the elite. The FED will be re-imposed on cosmetics, paints and varnishes and lubricating oil. The rate will be raised on cement from Rs400 per metric ton (PMT) to Rs500 PMT.
Special excise duty will be imposed on imported and locally manufactured goods as well. The government would impose 1pc withholding tax on purchase of property and raise the rate of withholding tax on disposal of immovable property at 1pc for NTN holders and 2pc for non-NTN holders.
The federal government would call provinces to raise DC rates in the budget. The real estate per unit price index is commonly known as DC rates in the provinces.
The finance bill will increase penalty on the sales tax registered persons involved in filing ‘untrue and incorrect returns’ and also increase penalties for non-registration with the sales tax department.
For the cottage industry, the government is considering reduction in the sales tax exemption threshold.
There are several proposals on the card including levy of regulatory duty on the luxury items. The government will increase the tax rate on the import of used cars as well, and it is also considering withdrawing zero per cent duty on some items and imposing 5pc duty on them.
At the same time, maximum customs duty from 30pc and 25pc will also be lowered, while duty will be raised on some products from 5-10pc.
Three customs concessionary regime SROs — 565, 575 and 656 — will be withdrawn and replaced by minimum customs duties. However, the reduced rate of concessions will be offered in the customs tariff for all and not specific persons/sectors.—MZK
Published in Dawn, June 3rd, 2014