Daily Times

ISLAMABAD: A new surge of inflation will come before Eid-ul-Fitr as Rs 300 billion levies announced in the federal budget 2016-17 will apply from today (Friday).

One per cent customs duty will be increased on 1400 items that would exacerbate the prices of electronic products, mobile phones, cigarettes, cement, mineral water, paan and security papers, LED lights, juices, shampoo, toothpaste and others.

The government will charge four per cent tax on the income of the Pakistan Cricket Board (PCB) from foreign tours. In addition, the PCB will have to pay a tax on media rights and sponsorship.

Twelve per cent withholding tax will be collected on electricity commercial bills exceeding Rs 20,000 per month. However, withholding tax has not been increased for industrial and domestic electricity consumers.

The finance minister had presented the forth government budget on June 3, in which he announced to give relief to the agriculture sector. However, the government imposed Rs 300 billion new taxes in the federal budget.

The government had also made a part of 62 proposals of the Senate and National Assembly Standing Committee on Finance before the wind-up budget speech in parliament.

The government imposed new taxes on hundreds of items, ranging from stationary to electronic products.

The government will charge 10 per cent customs duty on frozen fish, nine and eleven per cent on semi-printed and printed papers, respectively. However, exemption of customs duty and sales tax for newsprint would continue. From the new fiscal year 2016-17, sales tax on smart and costly mobile phones will be increased to Rs 1,000 from the existing Rs 500. However, excise duty on cheap phones will stay at Rs 500.

The government will charge five per cent tax on the ingredients of the poultry feed. However, zero-rating policy for manufacturers of dry milk will continue.

The government will charge excise duty of Re 1 per kilogram on cement and allow five per cent exemption on school fees of the children of the filers who have less than Rs 1 million annual income.

The government has increased the customs duty on chicken, eggs and livestock to six per cent. The customs duty on dairy products has been cut by three per cent. There will be no customs duty on water quality testing kits.

The customs duty on the indigenously manufactured LED lights has been decreased by 15 per cent. Relief has been given to importers of solar panels for one year.

Used ambulances for the EDHI Foundation continue to be duty free.

Secondhand and worn clothing have been excluded from further tax levy. Currently, five per cent sales tax is levied at the import stage, three per cent as value addition tax and two per cent as further tax under section 3(1A) on second hand and worn clothing that results in a cumulative impact of sales tax at 10 per cent. In order to provide relief to the low-income segment, second hand worn clothing has been exempted from further tax.

Sixteen per cent FED is leviable on services such as advertisement on CCTV/cable TV, shipping agents, banking companies, insurance companies, cooperative financing societies, modarbas, musharikas, franchise services, stevedores, stockbrokers and forex dealers, etc. Provinces and various chambers of commerce and industry have demanded withdrawal of the FED on such services as the provinces were already charging sales tax on these services.

The government has given exemption for a period of 23 years from sales tax and federal excise duty in establishing businesses in Gwadar Free Zone. This exemption shall be available to sales/supplies within the Gwadar Free Zone. However, sales/supplies outside the free zone and into the territory of Pakistan shall be subjected to applicable rates of sales tax and federal excise duty.

Stationery items are exempt from sales tax under the Sixth Schedule to the Sales Tax Act, 1990 as well as zero-rated under the Fifth Schedule thereof. It is proposed to withdraw zero-rating on stationery items and their inputs.

To meet the expenses of the war against terrorism, the government will charge the Super Tax for another year. Last year, the government collected 14 billion as Super Tax.