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Tax credit for housing loans
Limit increased from 100,000 or 25% of income
(whichever is less) to Rs.500,000 or 40% of income (whichever is less).
Apart from all banks regulated by SBP, NBFIs regulated by Securities Exchange
Commission allowed to advance loans.
Encouraging banks to promote consumer banking.
3% of consumer loans allowed as deduction against income from consumer banking
for creation of reserve for setting off any future bad debts in consumer
banking.
Reduction of withholding tax on rental
Withholding tax @ 7.5% of annual rent of buildings exceeding Rs. one lac being
replaced with 5% of withholding tax on rentals exceeding Rs. 2 lac.
Contribution towards annuity scheme of insurance companies
Tax credit being allowed for contribution upto Rs.2 lac or 10% of income
(whichever is less) as against Rs.1 lac or 10% previously.
Withholding tax on 10 year old transport vehicles
Concessional rate of Rs.1200 per annum for goods transport vehicles of 8120
kg or more over 10 year old allowed. Such vehicles of less than 2030 kg to 8120
kg remain exempt.
Allowing initial depreciation for second hand imported machinery
Initial depreciation allowed for second hand plant and machinery on first
use in Pakistan.
Concession on tax on profits of National Saving Certificate and Defence
Saving Certificate
Previously taxed upon encashment. Now option given to taxpayer to avail
concession by taxing at the rate applicable to the year to which profit relates.
Carry forward of loss of industrial undertakings for exempt period
Allowed to carry forward such loss to the post-exemption years.
Advance ruling introduced
To promote foreign direct investment in the country and to resolve all
uncertainty regarding tax matters, non-residents will be given the facility of
“advance ruling” delivered by committee comprising Chairman CBR, Member Income
Tax and Additional Secretary of Ministry of Law. Such ruling will be binding on
Commissioner of Income Tax.
Wealth Tax repealed
Wealth Tax Act repealed. However, pending proceedings will continue to be
protected.
Tax incentive for construction contracts executed outside Pakistan
A concessional rate of 1% of gross receipt being allowed for Pakistani
taxpayers for construction contracts executed outside the country.
Tariff rationalization:
Customs duty reduced on 259 items relating to engineering, agricultural
implements, casting and forging, ceramics, cutlery, bulbs & lights industries.
Used computer monitors to be taxed at 25%.
Dry fresh fruits from Afghanistan
Rate of duty being reduced from 20 and 25% to 10%.
Duty on smuggling prone items
Duty on some spices, silk yarn, ball bearings being reduced to 10% and on
watches to 5%.
Duty on Tea
Being reduced from 25% to 20%.
Duty on vehicles
Vehicles more than 1800 CC capacity being reduced from 200% to 150%.
Warehousing Surcharge on edible oils
Being reduced from 1% to 0.5%.
Baggage Rules
Overseas Pakistanis allowed to import free of duty items like tape
recorders, sewing machines, gas burners, DVD player.
Amendment of SRO 554(I)/98
SRO amended to deny exemption on consumable parts, maintenance spares and
accessories.
Customs duty replaced with ST on oilseeds
Imported oilseeds have been exempted from 10% customs duty. Instead 20% sales
tax will be levied on such seeds. The same rate of 20% will apply on oil
produced from such seeds but the end product (ghee and cooking oil) will remain
liable to GST @ 15%.
Duty on crude palm oil
Being reduced from 9500 PMT to Rs.9000 PMT to encourage local value addition
through refinement.
DTRE Scheme
To end difficulties of exporters in seeking refunds of customs duty and ST,
DTRE scheme has been modified in consultation with all stakeholders. In its
present changed shape, it accommodates all possible difficulties of exporters.
There will be an option to avail the DTRE either for customs & GST or, at the
option of the exporter, for GST only.
To accommodate the demand for payment of duty drawback on unavoidable local
purchases, government has decided to allow proportionate drawback if value of
local purchases does not exceed 10%.
Duty on X-ray equipment reduced
Diagnostic medical equipment based on use of X-ray or other radiation, being
reduced to 5%.
Duty on gold import reduced
The rate of one dollar per 11.6 grams of gold being reduced by 50% (i.e 50
cents).
Excise duty on cement reduced by 25% to Rs.750
per ton
This means reduction of Rs.12.50 per 50 kg bag.
If the incidence of GST is combined with reducd CED, the reduction of taxation
per bag of cement is Rs.14.37.
Two items eliminated from excise regime
Excise duty on paper & paperboard as well as on wires & cables eliminated.
Evasion of excise by some cigarette manufacturers
Changes made in rules to compel cigarette manufacturers to disclose their cost
structure so that minimum price for such suspicious brands can be fixed.
Provisions made for seizure and confiscation of machinery used for manufacture
of duty evading cigarettes.
Manufacture of counterfeit goods made a punishable offence under excise law.
The department to have right of restoring supervised clearance or engaging
private companies to do so where required.
Input adjustment of further tax disallowed
The incidence of Further Tax was never meant to be allowed as input adjustment.
Clarification being issued in this regard.
Concessional importer-cum-manufacturers to sell only to GST registered persons
Importers of raw materials and components for assembly and manufacture of goods
locally will be obliged to keep full records and make sales only to registered
persons.
Massive incentive for enhancing value added exports in agriculture and livestock
sectors
In order to bring about greater mechanization in the livestock and agriculture
sector for production of higher quality value added exportable goods, the
machinery and equipment for use in these sectors being freed of the burden of
GST. The beneficiaries will be: quality polished/graded rice, value added
millers, preserved vegetable and horticultural produce, dressed and prepared
fish and livestock product, preserved, sorted and graded fruits, etc.
Promotion of investment in purification, desalination of water resources and
treatment of industrial wastes/effluents
In the light of the experience of recent drought years, investment in water
purification, desalination, treatment of wastes and effluents ventures being
promoted through exemption of GST on relevant machinery and equipment.
Refund Rules
Exporters with established credentials to be allowed refunds in lump sum as
against the present two installment system spreading over several weeks. The
requirements of submission of stock statements to be modified for those
conforming to the input-output co-efficient determined by IOCO Directorate.
Combined with the strong expansion in the number of exporters availing DTRE, the
simplification of existing refund scheme will mark a major improvement.
Expansion of tax base
In order to provide strong incentives for compliance by hitherto resistant
sectors, the government has decided to resolve their genuine difficulties.
Therefore, the registered persons being encouraged to settle their past highly
disputed liabilities in a simplified manner by making their own declarations in
income tax returns as the basis for settlement.
Not only will the level of compliance increase in the case of existing taxpayers
but the others will be encouraged and come into the tax net in increasing
numbers.
Threshold of turnover for registered retailers
The existing threshold has been increased to more realistic level of turnover of
Rs.20 million per annum. Appropriate compliance will be ensured by more focused
attention on such retailers.
Assessment of GST liability on presumptive basis
To augment drive for compliance a mechanism has been introduced to enable
tax officials to determine the tax liability on basis of defined criteria such
as the location, the apparent size of business and its turnover, the number of
workers, the utilities billing, etc. This will be limited to either
non-taxpayers who should be in the net or those taxpayers who, despite being in
the tax net, do not file their tax return regularly.
Levy of GST at import stage
Necessary legal changes made to ensure the full collection of GST at the
import stage irrespective of the destination of the imported goods.
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