Rs 23 billion revenue effect: taxation, administrative measures in fiscal year 2012 budget
The net revenue effect of the taxation and administrative measures would be around Rs 23 billion during 2011-12. Sources told Business Recorder here on Wednesday that the aggregate of the revenue effect of all taxes in budget (2011-12) showed that the FBR will take administrative measures of Rs 50 billion in 2011-12. The net effect of revenue measures and relief measures comes to around Rs -27.037 billion during next fiscal.
Copyright Business Recorder, 2011
Resultantly, the net revenue effect of all taxes and administrative efforts would be nearly Rs 23 billion in 2011-12. The FBR has provided relief of Rs 2.137 billion through tariff rationalisation. Sales tax and federal excise measures would provide relief of Rs 52.350 billion. Sales tax and excise measures would generate Rs 31.250 billion. The net revenue impact of sales tax and federal excise is Rs -21.100 billion. The income tax measures would give relief of Rs 3.8 billion to the business community and general masses.
The total taxation measures would generate revenue of Rs 31.250 billion and relief measures totalled at Rs 58.287 billion, reflecting a net effect of Rs -27.037 billion in 2011-12. The reduction in withholding tax on cash withdrawal from banks would cause revenue loss of Rs 3 billion and increase in basic income tax exemption limit would cause Rs 800 million loss to the national exchequer in 2011-12.
Sources stated that the FBR has provided income tax relief to the tune of Rs 3.8 billion to the business community as well as general public. There is a nominal revenue impact of tax credit for investment in shares and in voluntary pension fund nominal; tax relief on withdrawal limit form voluntary pension scheme nominal; increase in rate of tax credit for enlistment; requirements of CNIC and NTN; filing of income tax returns by the commercial and industrial electricity consumers; tax rate on dividends received by banks form its assets management company; incentive for the non-residents to invest in government securities; incentive for resident individual to invest in government securities and deletion of capital value tax (CVT) on modarabas and instruments of redeemable capital would have nominal revenue impact.
The FBR data further revealed that removal of regulatory duty on 397 goods would cause revenue loss of Rs 2 billion and incentives to the pharmaceutical sector would result in negative revenue impact of Rs 100 million. The incentive for the CNG compressors industry would cause Rs 14 million loss to the national kitty. The concession for Butyl Acetate Industry, incentive for oil exploration companies and incentive for Hi-Tech car auto system industry would cause revenue loss of Rs 5 million each.
The reduction in the rate of sales tax from 17 to 16 percent would cause revenue loss of Rs 35 billion, elimination of special excise duty Rs 12 billion and proposal to reduce federal excise duty (FED) on cement and white cement would result in revenue loss of Rs 3 billion. The reduction in the rate of the FED from 12 to 6 percent on beverages would cause revenue loss of Rs 1.5 billion. The review of the FED regime would cause revenue loss of Rs 800 million. The withdrawal of the FED on services provided by property developers and promoters would have negative revenue implications of Rs 50 million.
The revenue effect prepared by the FBR further disclosed that the proposal to withdraw exemption on defence stores would generate additional revenue of Rs 10 billion, upward revision in the duty structure of cigarettes Rs 9 billion and rationalisation of the sales tax exemption regime would generate revenue of Rs 7 billion. The proposal to amend the special procedure for payment of sales tax by commercial importers would generate Rs 3 billion. The rationalisation of the zero-rating regime would generate revenue of Rs 1 billion. The reduction in the FED on filter rods from Rs 1 peer filter rod to 20% of the value of goods would generate Rs 200 million, increase FED on un-manufactured tobacco from Rs 5 to Rs 10 per kg would generate additional revenue of Rs 50 million and rationalisation of incidence of taxes on sugar at import and local supply stage would generate Rs 1 billion.
Resultantly, the FBR will gain Rs 31.250 billion from revenue measures of the sales tax and federal excise duty. The relief measures would cause revenue loss of Rs 52.350 billion. The net impact of the sales tax and FED measures would result in benefit of Rs 21.1 billion to the business and trade.