• MUHAMMAD UMAIR ZEB (FINANCE AND TAX ANALYST)

NATIONAL Assembly on Wednesday approved the Rs 9.6 trillion-rupee federal budget for the next fiscal year with some measures such as a petroleum development levy of up to Rs 50 expected to stoke further inflation that the Finance Ministry has projected to skyrocket to 15.5% in June.
There is no denying that tough days are ahead and the people have to face more price hike.
However, what was really surprising and shocking for many was the number of amendments introduced in the Finance Bill which, in fact, changed the whole look of the budget presented earlier on the tenth of June.
Though it is really welcoming that most of the recommendations furnished by the Senate were also incorporated, yet in our view, bringing such wholesale changes in the Finance Bill at the last moment only leaves a negative impression about the Government working and its decision making.
An amendment to take back the relief provided to the salaried class especially bringing back the tax exemption limit to six hundred thousand rupees from 1.2 million rupees and other tax measures amounting to one trillion rupees have definitely been taken to satisfy the International Monetary Fund (IMF) but if these were required then these should have been announced in the original Finance Bill as it would have demonstrated the clarity on the part of the Government.
The Government has been in negotiations with the IMF since coming to power, it should have been clear as to how far it can extend relief and what tax measures are required to take forward the country.
Whilst an effort has been made to bring more sectors into the tax net with measures such as taxes imposed on retailers, restaurants etc, yet those already paying taxes have been further burdened with super tax which needs to be reviewed.
Given the challenges faced by the country on the economic front, there are no two opinions that all the sectors and the affluent class honestly pay taxes.
We stand with the vision of State of taking the country towards self-reliance, for which difficult decisions have to be made, however, to achieve this goal, there should be clarity of purpose and the focus must be on bringing much needed political stability.
AMENDMENTS:

The government also agreed to the Fund’s demand of imposing a 1% poverty tax on companies earning Rs150 million, 2% on those generating an income of Rs200 million, 3% on those earning more than 250 million, and 4% on the ones generating an income of Rs300 million or more than that.
These measures were in addition to the 10% super tax imposed on 13 large-scale industries — cement, steel, banking, airlines, textile, automobile assembling, sugar mills, beverages, oil and gas, fertiliser, cigarettes, chemicals, and LNG terminals.
The lower house also approved amending the Petroleum Products (Petroleum Levy) Ordinance, 1961, caving in to the IMF’s demand of imposing a petroleum tax levy of Rs50.
OTHER AMENDMENTS APPROVED
• Collecting sales tax from traders through electricity bills
• 5% sales tax on services of software and IT consultants
• Fixed income and sales tax worth Rs40,000 has been imposed on the gold shops that cover an area of less than 300 square feet

  • Muhammad Umair Zeb is Peshawar-based freelance journalist, columnist (The Khyber Mail, The News Int, Business Recorder, The Frontier Post) & Finance and Tax Analyst.

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