ISLAMABAD  -   The government has targeted imported luxury cars and expensive mobile phones for taxation in the 'mini-budget' — technically the Finance Supplementary (Second Amendment) Bill of 2019 that was presented by Finance Minister Asad Umar during the National Assembly session held Wednesday evening.

The officials of Federal Board of Revenue (FBR) informed the media that the government had introduced the taxation measures worth Rs3 to Rs4 billion. Meanwhile, it has given relief measure worth Rs6.8 billion by reducing the taxes.  They said that mini budget has introduced to facilitate exporters and new investment in the country.

In major taxation measures, the government has targeted the imported luxury cars. It has increased the Federal Excise Duty (FED) on imported cars and jeeps of engine capacity exceeding 1800cc to 25 percent from existing 20 percent. Meanwhile, the FED on imported cars and jeeps of engine capacity exceeding 3000cc has enhanced to 30 percent. Furthermore, it has proposed to levy Excise Duty of 10 percent on locally manufactured/assembled cars and SUVs etc with engine capacity exceeding 1800cc.

The government, in Finance Supplementary (Second Amendment) Bill, 2019 has also revised the taxes on the import of mobile phones. The government has proposed to reduce the tax to Rs400 from Rs1025 on the mobile phone costing Rs10,000. On the mobile phone that retail price is Rs28000, the tax has reduced to Rs4000 from existing Rs4368. Similarly, the government would charge Rs6000 tax on the mobile phone, which retail price is Rs60,000. Meanwhile, there would be Rs23000 tax on the phone that cost is Rs150,000. Furthermore, the government would charge Rs41000 on the import of phone, which cost is Rs150,000 and plus.

“Media plays a critical role towards keeping society informed about development in our national life as well as in the global arena. Presently, newsprint, in rolls or sheets if imported by publishers of newspapers or periodical, as certified by All Pakistan Newspaper Society (APNS), is allowed import at concessionary CD rate of 5%. In order to reduce input cost of newspapers and support print media industry, and for cheaper access of newspaper for all citizens, it is being proposed that the existing 5% CD may be exempted subject to existing condition of certification by APNS,” Finance Minister Asad Umar said.

In income tax, that government has proposed to allow non-resident Pakistanis holding international passports can purchase any motor vehicles and immovable property without filing requirements. Similarly, to incentivize foreign remittances by overseas Pakistanis, advance tax on cash withdrawal on account solely fed by the foreign remittance has been exempted. The government has also proposed that super tax at 4 percent at banks maintained till tax year 2021 whereas for non-banking it is intended to abolish this tax from the year 2020.  Similarly, to promote capital formation, the tax on undistributed profits is being abolished.

According to the proposal, the tax on number of stock exchange in lieu of their commission has been abolished. Now their income from commission is to be taxed under the normal law.  The amendment intends to allow carry forward of losses from securities sustained in a year to subsequent three years.  

It has proposed that non-filers be allowed to book, register or purchase a new locally manufactured motor vehicle upto 1300CC. This would remove the distortion between purchase of immovable property and vehicles. It would also stimulate the production of local vehicles with positive impact on automobile industry and associated vendors. To promote compliance with tax laws, the withholding tax rates for non-filers on such registration is proposed to be enhanced by 50% of existing rates.

The number of tax filers in Pakistan is quite low despite an increase of 34%during our regime. Broadening of tax base still remains a major challenge. Small businesses are a substantial part of national economy. They find the tax regime complicated and daunting. We have to facilitate these small businesses for better tax compliance. A considerable number of such shopkeepers are part of the undocumented economy and, at present, outside the tax system. The aim of documentation of economy cannot be achieved until small businesses file tax returns. Through this bill, it is proposed to introduce a provision that will allow the Federal Government to notify simplified tax schemes for the small shopkeepers. Such scheme shall, initially, be applicable in Islamabad Capital Territory. It will be extended to rest of the country after monitoring and evaluation of results in Islamabad.