The Federal Board of Revenue (FBR) is considering increasing standard rate of Sales Tax from 17 to 18 percent, increase in rate of Federal Excise Duty (FED) on certain excisable commodities and imposition of FED on a few new items and withdrawal of income tax exemptions available to the privileged class in coming budget (2019-20).
Sources told Business Recorder here on Wednesday that the FBR's first internal meeting on budget was held at the FBR House. The meeting was chaired by FBR Chairman Shabbar Zaidi and attended by FBR team of members. Different proposals are under examination for revenue generation for 2019-20. However, no final decision has been taken on these proposals, as budget meetings are under way on a daily basis.
According to sources, if the proposal to increase standard rate of Sales Tax from 17 to 18 percent is finalised, the revenue impact may be over Rs 100 billion in 2019-20 keeping in view current collection of Sales Tax to the tune of Rs 1,165 billion during July-April (2018-19).
The FBR has also proposed increase in the rate of the FED on existing items like beverages and cigarettes. A few items like juices may be brought within the regime of the FED. These would be revenue generation measures on the FED side, sources said.
The FBR may also propose increase in the rate of Sales Tax on petroleum products from next fiscal year to generate additional revenue. Presently, the FBR is charging standard rate of 17 percent Sales Tax on most of the petroleum products. In the past Sales Tax on high speed diesel went maximum high up to 50-60 percent.
Sources said that the FBR is examining a proposal to increase the threshold of taxable income for salaried individuals from Rs 1,200,000 per annum to Rs 800,000 per annum. The government may revise income tax slabs for salaried class in coming budget (2019-20).
Through the Finance Act, 2018 rates for both salaried and non-salaried individuals were unified and threshold of taxable income was increased from
Rs 400,0001 to Rs 1,200,000. Through the Finance Supplementary (Amendment) Act, 2018, separate tax rates were implemented for salaried and non-salaried individuals respectively.
The FBR is reviewing the Second Schedule of the Income Tax Ordinance 2001 for withdrawal of tax exemptions and concessions.
Presently, income tax exemption is available to the perquisite represented by the right of the President, the provincial governors and the Chiefs of Staff, Pakistan Armed Forces, to occupy free of rent as a place of residence any premises provided by the government.
The exemption is also available on perquisite represented by free conveyance provided and the sumptuary (entertainment) allowance granted by the government to the Chiefs of Staff, Pakistan Armed Forces, and the corps commanders.
The perquisites represented by the right of a judge of the Supreme Court of Pakistan or of a judge of High Court to occupy free of rent as a place of residence any premises provided by federal or provincial government, as the case may be, or in case a judge chooses to reside in a house not provided by the government, so much of income which represents the sum paid to him as house rent allowance.
The following perquisites, benefits and allowances received by a judge of Supreme Court of Pakistan and judge of High Court, shall be exempt from tax: Perquisites and benefits derived from use of official car maintained at government expenses; superior judicial allowance payable to a judge of Supreme Court of Pakistan and judge of a High Court; and transfer allowance payable to a judge of High Court.
The following perquisites of the Judge of Supreme Court of Pakistan and Judge of High Court shall also be exempt from tax during service, and on or after retirement: the services of a driver and an orderly; 1,000 free local telephone calls per month; 1000 units of electricity as well as (25 hm3 of gas) per month and free supply of water; and 200 litres of petrol per month.