Giving technical briefing to media at FBR House here on Friday, FBR Chairman Dr Muhammad Irshad informed that FBR has taken new revenue measures of Rs 120 billion for 2017-18. The relief measures have been worked out at Rs 32.247 billion for the next fiscal year. The net impact of the taxation measures have been worked out at Rs 87.753 billion for 2017-18.
"We have strengthened the envisaged reform agenda pursued by the government by providing relief to growth-oriented sectors and increasing cost of doing business for non-compliant sectors. We have provided facilities to agriculture sector," Chairman FBR Dr Mohammad Irshad told reporters in technical briefing arranged here at FBR''s headquarters on Friday night after the budget speech by Finance Minister Ishaq Dar.
Tax-wise breakup revealed that the customs duty measures have been totalled at Rs 20 billion and relief measures at Rs 1.150 billion for 2017-18. The net impact of the customs duty measures have been calculated at Rs 18.9 billion. The FBR official said that the impact of the RD on the import of luxury and non-essential items stood at Rs 10 billion. The RD has been increased on the import of tiles, cosmetics, perfumes, shoes, makeup, watches, chocolates and other luxury and non-essential items already subjected to RD.
The new taxation measures of Rs 52.60 billion have been taken on the sales tax and Federal Excise Duty (FED) side. Around Rs 52.60 billion measures included both the measures of sales tax as well as raise in FED rates for 2017-18. The relief measures of sales tax and FED have been calculated at Rs 18.735 billion. The net impact of the sales tax and FED measures for next fiscal year has been worked out at Rs 33.86 billion for 2017-18.
The FBR has taken new taxation measures of Rs 47.350 billion of income tax for 2017-18. The income tax relief measures have been worked out at Rs 12.587 billion. The net impact of the income tax measures comes to Rs 34.763 billion for 2017-18, he added. The measures of Federal Excise Duty have been stood between Rs 6 billion to Rs 8 billion, FBR officials said.
Dr Muhammad Irshad said that the 50 per cent increase has been made in the rate of withholding tax on non-filers of income tax returns. Through Finance Bill 2017, the differential of withholding tax rates for filers viz-a-viz non- filers, is being enhanced in scope and rates for various transactions including, payments made to residents and non-resident persons for sales/services/contracts, payments for prize bond/lottery, sale by auction, commission/discount to petrol pump operators etc.
At present, Super Tax is levied at the rate of 4% on the income of Banking Companies and at the rate of 3% for other persons. The circumstances which necessitated introduction of Super Tax are still continuing, therefore, it is proposed to extend the levy of Super Tax by one more year, i.e. for the tax year 2017.
Vide the Finance Act, 2016, a fixed tax on builders and developers on the basis of developed or built-up area was introduced at different rates for various cities across the country. The departure from normal tax regime to fixed tax regime did not yield the expected results, therefore, it is proposed that the normal tax regime be reintroduced for land developers and builders.
Under Finance Bill 2017, at present there is a three-tier rate structure for capital gains tax on securities based upon the holding period of securities i.e. less than 12 months, more than 12 months but less than 24 months and more than 24 months but less than 5 years. For the purpose of simplification and promotion of stock market transactions, a flat /single rate of tax of 15% for filers and 20% for non- filers is being introduced.
The FBR has increased Federal Excise Duty (FED) on cement from Rs 1 per kg to Rs 1.25 per kg.
The present rate of tax of 12.5 % on dividend income is on the lower side as compared to most other countries in the region. It is proposed that the rate be increase to 15%. Furthermore, rate of tax on dividend received from mutual funds is being rationalised and enhanced from existing 10% to 12.5%.
At present there are three slabs for taxation of interest income for persons earning interest income up to Rs 25 million, from Rs 25 million to Rs 50 million and in excess of Rs 50 million. In order to rationalise taxation of interest income and to reduce the incidence of tax upon persons earning lesser interest income the following new slabs are being introduced:- Where mark-up does not exceed Rs 5 million, 10 per cent; where mark-up exceeds Rs 5 million but does not exceed Rs 25 million, 12.5%; and where mark-up exceeds Rs 25 million, the rate of 15 per cent tax would be applicable.
Under the revised zero-rating regime for five export-oriented sectors, the payment of sales tax on retail sales of five export oriented sectors is chargeable to sales tax @ 5%. It is proposed to increase the said rate to 6%. Moreover, sales tax on commercial import of fabrics is zero-rated under SRO 1125(I)/2011, dated 31.12.2011. It is proposed to levy sales tax @ 6% on commercial import of fabrics.
Under Finance Bill 2017, currently the rate of advance withholding tax collected from stock exchange brokers is 0.02% and is adjustable. This withholding tax is now being made final tax in respect of such persons. In order to document purchase of tobacco, Pakistan Tobacco Board is being entrusted with collection of withholding tax on purchase of tobacco by manufacturers of cigarettes at the rate of 5% of the purchase value of tobacco, at the time of collecting cess.
At present, the rate of withholding tax on sales made by manufacturers, wholesaler, dealers and distributors of electronics goods to retailers is liable to adjustable withholding tax at the rate of 0.5%. It is proposed to enhance the tax rate to 1%.
Presently, manufacturers /commercial importers are required to collect withholding tax on sale to dealers, distributors and wholesalers on various items such as electronic goods, cigarettes, etc, at the rate of 0.1% of such sales. The scope of this withholding tax is being extended to batteries.
Rate of sales tax for steel sector has been increased. Steel sector is currently paying sales tax on the basis of consumption of electricity at the rate of Rs 9 per unit of electricity. The existing rate of Rs 9/unit of electricity is proposed to be enhanced to Rs 10.5 and corresponding increase shall be made in ship breaking and other allied industry.
Copyright Business Recorder, 2017