51. During the last four years, the government initiated far-reaching structural and administrative reforms for moving towards a more efficient and equitable tax system. The comprehensive strategy for medium term period aims at increasing tax-to-GDP ratio to a respectable level of 15 percent.
52. FBR initiated a historic exercise to eliminate discriminatory concessions and exemptions. Concessions and tax exemptions above Rs.300 Billion were withdrawn in three years. Other areas of reforms included broadening of tax base, increasing the cost of non-compliance, tariff reforms, simplification of business processes for taxpayer’s facilitation and effective enforcement through enhanced use of automation.
53. Moving in the same direction, the broad principle of the proposed taxation measures for FY 2017-18 include consolidation of the gains made in the period of this government through extension of differential taxation for rewarding compliance and penalizing non-compliance, protection of domestic industry, removal of distortions, cutting down on discretion, measures for ease of doing business, providing incentives for growth and employment generation and increase in the share of direct taxes.
56. Rationalizing Corporate Tax Rate- As per government policy and in order to encourage corporatization, corporate tax rates are being reduced by 1% each year starting from 35% in TY 2013 and coming down to 30% in TY 2018. As per our commitment the corporate tax rate will be 30% for the next year i.e.TY 2018.
57. Incentives for Islamic Banking- On the recommendation of the State Bank of Pakistan and to promote Islamic mode of Financing tax neutrality for Islamic Banking instruments such as - Musharika , Ijarah, Murabaha as compared with conventional banking is proposed to be provided.
58. Providing Relief to Compliant Taxpayers- In order to encourage compliant taxpayers, withholding tax on registration of motor vehicles is proposed to be reduced from Rs 10,000 to Rs 7,500 for engine capacity upto 850 CC, from Rs 20,000 to Rs 15,000 for engine capacity between 851 CC to 1,000 CC and from Rs 30,000 to Rs 25,000 for engine capacity between 1001 CC to 1,300 CC. The rates for non-filers will remain unchanged.
59. Exemption from Withholding Tax on Vehicles Leased Under the Prime Ministers Youth Loan Scheme – To provide relief to the unemployed youth, exemption from collection of advance tax on vehicles leased under the Prime Ministers Youth Loan Scheme is proposed.
60. Relief on Education Expenses- In order to provide relief on education expenses which are unbearable for low income groups, individuals having taxable income less than Rs. 1 million were given tax relief equal to 5% of school fee up to Rs. 60,000 per child per annum in the Budget for 2016-17.The threshold for availing deduction for education expense is proposed to be enhanced upto taxable income of Rs 1.5M per annum. This will provide added relief for medium income groups.
61. Enhancement of Threshold for Payment of Advance Tax- At present every individual deriving income above Rs 500,000 is required to pay advance tax in four installments on the basis of tax paid for the last tax year. This threshold of Rs 500,000 is in place since 1st July 2010 and is now proposed to be enhanced to Rs.1, 000,000 in order to facilitate small taxpayers.
62. Enhancing the Limit of Raw Material Importable under Exemption Certificate- The limit for importing raw material by manufacturers through exemption from income tax at import stage is proposed to be enhanced from 110% of the quantity imported in the last year to 125% of the quantity imported in the last year to promote industrial expansion and facilitate industry.
63. Enhancement of limit on sale promotion expenses by pharmaceutical sector- In the Budget of 2016-17 a limit of 5% of turnover was placed for sale promotion expenses by pharmaceutical sector. This has caused hardship for the sector and stopped its growth. Therefore, the limit of 5% is proposed to be enhanced to 10% of turnover.
64. Reduction of withholding tax rates on Fast Moving Consumer GoodsDistributors of Fast Moving Consumer Goods are operating at low profit margins and therefore minimum tax u/s 113 is chargeable at reduced rate of 0.2%. However, FMCG distributors were subject to normal rate of withholding tax on their supplies. In Budget 2016-17 Withholding tax rate on supplies for distributors of FMCG, was reduced from 4% to 3% for companies and from 4.5% to 3.5% for others. The withholding tax rates are still on the higher side and are therefore, proposed to be reduced Reduction from 3.5% to 2.5%. There will be no reduction on the rates for non-filers.
65. Facility of Revision of Withholding Tax Statement- On the demand of withholding agents they are being granted the right to revise their withholding tax statements in the case of any error or omission within 60 days of filing the statement.
66. Right of Appeal against Orders Passed due to Non-Filing of ReturnsUnder the current law in case of non-filing of return a provisional assessment order is issued by the department and the tax becomes payable after 45 days. Taxpayer cannot file an appeal against such order. On the demand of taxpayers and to address the genuine grievances in hardship cases, this system is proposed to be done away with. It is proposed that instead of provisional assessment order an appealable order may be passed on default of non-filing of return.
67. Tax Credit on Enlistment in Stock Exchange- In the Budget for 2016-17 20% tax credit on tax payable for enlistment in stock exchange was made available for 2 years instead of 1 year. SECP has commended this measure and has recommended that in order to make this measure really successful credit at a reduced may also be made available for the next two years. It is accordingly proposed to allow tax credit at a rate of 20% for the first two years of enlistment and at a rate of 10% for the succeeding two years.
68. Enhancement of Exemption Limit for Withholding Tax on Insurance Premium- In order to broaden the tax base and to encourage compliance with tax laws, adjus
Hamza Rao is a member of the staff at Daily Pakistan. He can be reached at raohamzafree@gmail.com. He tweets at @HamzaRaoxxx
Pakistani rupee remains stable against US dollar in the open market on 29 March, 2024.
In the open market, the US dollar was being quoted at 278.3 for buying and 281.05 for selling.
Euro moves down to 299.75 for buying and 302.75 for selling while British Pound hovers around 353.75 for buying, and 357.25 for selling.
UAE Dirham AED remains stable at 75.55 whereas the Saudi Riyal saw minor increase, with new rates at 73.70.
Currency | Symbol | Buying | Selling |
US Dollar | USD | 278.3 | 281.05 |
Euro | EUR | 299.75 | 302.75 |
UK Pound Sterling | GBP | 353.75 | 357.25 |
U.A.E Dirham | AED | 75.55 | 76.3 |
Saudi Riyal | SAR | 73.70 | 74.4 |
Australian Dollar | AUD | 182.9 | 184.7 |
Bahrain Dinar | BHD | 739.61 | 747.61 |
Canadian Dollar | CAD | 204.25 | 206.46 |
China Yuan | CNY | 38.74 | 39.14 |
Danish Krone | DKK | 40.30 | 40.7 |
Hong Kong Dollar | HKD | 35.55 | 35.9 |
Indian Rupee | INR | 3.33 | 3.44 |
Japanese Yen | JPY | 1.86 | 1.94 |
Kuwaiti Dinar | KWD | 901.14 | 910.14 |
Malaysian Ringgit | MYR | 59.25 | 59.85 |
New Zealand Dollar | NZD | 168.56 | 170.56 |
Norwegians Krone | NOK | 26.19 | 26.49 |
Omani Riyal | OMR | 724.36 | 732.36 |
Qatari Riyal | QAR | 76.57 | 77.27 |
Singapore Dollar | SGD | 206.25 | 208.25 |
Swedish Korona | SEK | 26.89 | 27.19 |
Swiss Franc | CHF | 313.78 | 316.28 |
Thai Bhat | THB | 7.76 | 7.91 |
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