Last update: Wed, 07 Dec 2016 05pm

Budgets: 2005-06


The government rushed Finance Bill 2005 through the National Assembly on Friday containing annual budget statement amid an uproar, as combined opposition protesting against political victimisation stormed out of the House. Taking advantage of the absence of combined opposition, which boycotted the entire evening proceedings against the suspension of at least seven Punjab Assembly members from Pakistan Muslim League (Nawaz) and Pakistan People's Party Parliamentarians by the provincial speaker, the treasury got the bill passed with ease.
The State Minister for Finance, Omar Ayub Khan, on Monday announced an incentive-laden 2005-06 budget, having total outlay of Rs 1.098 trillion with major tax relief to agriculture and industrial sectors as well as handsome increase in the government employees'''' pay and pension. The revenue target for CBR was revised upward to Rs 690 billion, against Rs 590 billion of the outgoing year. Fiscal deficit has been estimated at 3.8 percent for the next fiscal year. In his maiden budget speech in the Parliament, Omar announced reduction in taxes for several sectors.
The Central Board of Revenue (CBR) has announced a new scheme for the textile industry by reducing sales tax to zero percent on the import and supply of all items/goods and services utilised in the entire manufacturing regime of textiles. This will eliminate 60-65 percent of the overall quantum of accumulated sales tax refunds due to levy of GST. The CBR has also proposed to allow zero-rating scheme for carpet, leather, surgical goods and sports goods industries.
The Central Board of Revenue (CBR) has revised the existing slabs to reduce customs duty on the import of cars. The duty will be 50 percent on the import of vehicles having engine capacity of 1,000-1,500cc. Previously, 50 percent duty was charged on the import of 1,000-1,300cc cars. Now the engine capacity has been enhanced to 1,500cc. The duty will be 65 percent on the import of cars with engine capacity between 1,501 to 1,800cc. Previously, 70 percent duty was applicable on the import of cars with engine capacity of 1,501 to 1,800cc.
The government has reduced customs duty on the import of 1,870 items and duty on 16 items has been enhanced to protect the local industry.
The Federal Government has reduced the income tax for salaried persons where the income chargeable under "salary" exceeds 50 percent of his taxable income. The Finance Bill 2005 placed before the National Assembly on Monday, spells out the following rates of income tax:
The widely expected imposition of tax/duty or wealth tax, etc., on sale and purchase of landed/urban property, residential plots of different housing societies was not announced in the budget. The Central Board of Revenue''''s (CBR) proposal to levy tax on services sector to broaden the tax net is said to be rejected at the last moment.