ISLAMABAD: The mini-budget is aimed to provide incentives to the banks for advancing loans to micro-and small enterprises which would help boost economic activities and generate employment, said Member Inland Revenue (Policy) of the Federal Board of Revenue Hamid Atique Sarwar said.
The federal government announced several relief tax relief measures in its Finance Supplementary (Second Amendment) Bill, 2019 for promoting local industrial sector as well as providing maximum relief to common man.
Highlighting salient features of the measures taken by the government, Sarwar said no additional tax was proposed in the bill.
He said it was proposed provide incentives to the banks for advancing loans to micro-and small enterprises low cost hosing agriculture finance, which would help boost economic activities and generate employment.
The government, he said, had also proposed to remove Advance Income Tax on cash withdrawal and cash denominated instruments from banks for tax filers. In order to provide relief to filers, advance tax on cash withdrawal and sale of banking instruments had been totally abolished.
Enabling purchase of immovable property and vehicles by non-resident Pakistanis, he said, it was proposed to allow non-resident Pakistanis holding international passports to purchase any motor vehicle and immovable property without filing requirements.
He said for enabling purchase of locally manufactured vehicles up to 1300 CC without filing requirement after amendments, the restriction on purchase of locally manufactured motor vehicles above 1300 cc is proposed to be abolished for non-filers.
He said the number of withholding statements was proposed to be reduced from 12 to two for furthering ease of doing business. The frequency of monthly withholding statements had been done away with and now the businesses would have to file biannual statements instead, he added.
He said that it was also proposed to reduce rate of Advance Tax on small marriage halls, community halls etc with function area less than 500 sqyd. The minimum advance tax for them had been reduced from Rs 20,000 to Rs 5,000.
He said the removal of Advance Tax on cash withdrawal from foreign remittance fed accounts was proposed to incentivize foreign remittance by overseas Pakistanis. Advance tax on cash withdrawal on accounts solely fed by foreign remittance had been exempted.
For banks the rate of super tax at 4 percent as was previously had been maintained till tax year 2021 whereas for non-banking persons it was intended to abolish it from the tax year 2020, he added.
He said tax on inter-corporate dividend in case of companies availing group relief had been reduced to the extent of percentage of shareholding the recipient of dividend had in the distributing company.
The FBR official said to promote capital formation, the tax on undistributed profits had been abolished. Withholding tax on members of stock exchange in lieu of their commission had also been abolished, which would now be taxed under normal law, he added.
He said in order to encourage greenfield investment and industrialization, it was proposed to grant exemption from payment of sales tax on imported plant and machinery, falling in chapter 84 and 85 of PCT excluding consumer durables and office equipment, to be used for setting up new industry for production of taxable goods. ” The exemption shall be subject to an exemption certificate to be issued by concerned Commissioner Inland Revenue. The Board will also circulate an indicative positive list of such machinery,” he added.
The Member IR said huge amounts claimed by taxpayers were stuck up in refunds which caused liquidity crunch for businesses. “These refunds have accumulated over a long time.” Section 67A was proposed to be inserted in the Sales Tax Act, 1990, to provide for issuance of promissory notes to claimants at their option, he added.
He said measures were proposed for the simplification and rationalization of tax structure on import of mobile phones. The existing feature-based sales tax slabs on mobile phones in the Ninth Schedule to the Sales Tax Act, 1990, were complicated and also did not differentiate between inexpensive and expensive mobile phones. The slabs were being replaced with import value based slabs.
However, he said, increase in the Federal Excise Duty on imported luxury cars / SUVs; and Levy of FED on local luxury cars / SUVs was already imposed on imported cars and jeeps of engine capacity exceeding 1800cc at 20 percent . In order to further discourage the import of such luxury cars and jeeps, it was proposed to enhance the rate of Excise Duty from 20% to 25%, for such cars and jeeps up to capacity 3000 cc and to 30% for cars exceeding 3000 cc.
It was also proposed to levy Excise Duty at 10% on locally manufactured / assembled cars and SUVs with engine capacity exceeding 1800cc, he added.
The Member IR said continuation of exemption on plant, machinery and equipment for renewable energy machinery and equipment relating to renewable energy was already available under the Sixth Schedule to the Sales Tax Act, 1990. However, in order to provide for certainty and give confidence to investor, the continuity of exemption was being assured up to 30th June, 2023, by amending relevant provisions in the Sixth Schedule, he added.
In order to provide relief for cancer patients, he said, the existing exemption in the Sixth Schedule of the Sales Tax Act, 1990, relating to ostomy procedures for cancer patients was restrictive and lacked clarity. The exemption was now being linked to ostomy related appliances and items listed under PCT heading 99.25, he added.