Import wood, save our forests. — Ali Hassan/File
In a bid to support tourism related industries, the government has also reduced customs duty on pre-fabricated structures for hotels.
As a result, you can expect to see a lot more pre-fab huts in the northern areas, especially in areas which are considered scenic camping spots.
Incentives for local industries
Apart from granting exemption from customs duty on more than 1,650 raw materials and industrial inputs, the government has granted considerable relief to industries that use or deal in paper products.
It has completely exempted customs duty on raw materials used by the paper industry, and also reduced customs duties on raw material for paper sizing agents, on bobbins and spools made of paperboard, on input goods for paper based liquid food packaging industry, and also on writing and printing papers.
Exemption from customs duty has also been granted for machinery parts and accessories used in the textile sector, while customs duties have been reduced on base oil meant to be used as an input for coning oil, white oil and other textile oils.
In the pharma sector, customs duty has been exempted on 18 medicinal inputs as well as on medicines for certain rare diseases.
Other industries to feel the pinch
On the other hand, the special tax regime extended to the steel sector is being abolished, and it will be slapped with a 17pc FED.
Five zero-rated industries that enjoyed exemptions from sales tax (textile, leather, carpets, sports goods and surgical goods) will also feel the pinch as the government withdraws special treatment.
The government believes these exemptions are being misused and resulting in lost revenues. Therefore, it is reinstating a standard rate of 17pc on all items covered under SRO1125.
“The rate of sales tax on local supplies of finished articles of textile and leather and finished fabric may be raised from current 6pc for integrated businesses and 9pc for others, to 15pc and 17pc, respectively,” states the budget.
“Zero-rating of utilities (gas, electricity and fuels) allowed to these export-oriented sectors through various sales tax general orders be withdrawn.”
In compensation for the new taxes, the government has agreed to refund sales tax to these sectors on an automated basis so that sales tax on inputs is immediately refunded.
Tightening documentation of the economy
The government is making it a requirement for all retail shops having an area of more than 1,000 square feet (111 square yards; 3.67 marla) to integrate their points of sale (POS) with FBR’s computerised systems so that all their sales are reported in real time.
Not only that, the government is also tightening its oversight over the cottage industry to redefine it to include enterprises that a) do not have an industrial gas or electricity connection; are b) located in a residential area; c) do not employ more than 10 workers; and d) do not have an annual turnover of more than Rs2 million.
Criminal proceedings against corrupt FBR officers
“In order to effectively check misuse of authority to gain financial benefit, a new enabling provision is being introduced to prescribe rules for initiating criminal proceedings against officers and officials of the Board [Federal Board of Revenue] who deliberately commit acts or fail to act for personal benefits.
“Similar action would also be taken against persons who offer bribes or other financial benefits to the tax employees,” states the budget document.