Daily Times

ISLAMABAD: The federal government imposed Rs 300 billion new taxes in the federal budget, which was presented on Friday.

The government has imposed new taxes on hundreds of items, including mobile phones, cigarettes, cement, mineral water, paan and security papers.To meet the expenses of the war against terrorism, it is proposed that the Super Tax should be extended for another year. Twelve percent withholding tax would be imposed on electricity commercial bills exceeding Rs 20,000 per month. However, withholding tax has not been increased for industrial and domestic electricity consumers.

It is proposed in the budget that 10 percent customs duty should be levied on frozen fish, nine and eleven percent on semi-printed and printed papers, respectively. However, exemption of customs duty and sales tax for newsprint would continue.

Sale tax on smart and costly mobile phones would be increased to Rs 1,000 from the existing Rs 500. However, excise duty on cheap phone will stay at Rs 500.

The government has decided to impose four percent tax on the income of the Pakistan Cricket Board (PCB) from foreign tours. In addition, the PCB will have to pay tax on media rights and sponsorship.

The government has decided to impose five percent tax on the ingredients of the poultry feed. The government has decided to continue its zero-rating policy for manufacturers of dry milk. The government has decided to impose excise duty of Re 1 per kilogram on cement and allow five percent 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 percent. Customs duty on dairy products has been cut by three percent. There will be no customs duty on water quality testing kits.

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

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

The Ministry of National Food Security and Research has proposed exemption from sales tax on pesticides. Keeping in view the importance of pesticides for the agriculture sector, pesticides and their ingredients are being granted exemption from sales tax.

The Ministry of National Health Services has proposed exemption from sales tax on the import of vitamins, premixes, minerals and micronutrients (food grade) to combat growth stunting. These items are being granted exemption from sales tax.

The Ministry of Information Technology has proposed exemption of sales tax on laptops and personal computers with a view to promoting Information & Communication Technology (ICTs).

Exemption from sales tax to laptops and personal computers is being granted. This step will also promote genuine imports and will render informal and illegal imports as uncompetitive.

The cottage industry is exempted from payment of sales tax. Turnover threshold prescribed for cottage industry is Rs 5 million. This low turnover threshold causes undue hardships and registration requirements for small manufactures who make minimal contributions to revenues. Turnover threshold for cottage industry is being raised to Rs 10 million.

Secondhand and worn clothing have been excluded from further tax levy. Currently, 5% sales tax is levied at the import stage, 3% as value addition tax and 2% as further tax under section 3(1A) on second hand and worn clothing that results in cumulative impact of sales tax at 10%. In order to provide relief to the low-income segment, using second hand worn clothing, exemption from further tax is being provided.

Sixteen percent 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, stock brokers and forex dealers, etc. Provinces and various chambers of commerce and industry have demanded withdrawal of FED on such services as provinces are already charging sales tax on these services.

FED on the services on which provinces are collecting sales tax is being withdrawn.

Exemption to the coal mining machinery, equipment, spares, etc. for Thar Coal Field as provided in the Sixth Schedule to the Sales Tax Act, 1990 includes vehicles for site use i.e. single or double cabin pick-ups. Dump trucks, although being vehicles for site use, are not covered under the said provision. Exemption from sales tax is, therefore, being granted to dump trucks.

Exemption from sales tax and Federal Excise Duty to Concession Holder of Gwadar Port Authority and its operating companies, their contractors and subcontractors for development of Gwadar Port and Gwadar Free Zone. Exemption from sales tax and Federal Excise Duty for a period of 40 years on the import and supply of materials, equipment, ship bunker oils brought and sold to ships calling on/visiting Gwadar Port, for the development of Gwadar Port and Free Zone for Gwadar Port is being granted.

Exemption for a period of 23 years from sales tax and Federal Excise Duty is being granted to businesses to be established 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.

Exemption to machinery and equipment for the development of grain handling and storage facilities is available under the Sales Tax Act, 1990. It is proposed to include silos in the said exemption.

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.