Revised tax regime for traders: Promulgation of Ordinance put off till next month

ISLAMABAD: The promulgation of the Presidential Ordinance has been postponed till next month. The Ordinance contains a revised tax regime for traders, a slight increase in the Federal Excise Duty (FED) on cigarettes/beverages, and a few new taxation measures for 2022-23 including a lower rate of sales tax on few zero-rated sectors.

Sources told Business Recorder Thursday that the Ordinance would be promulgated around September 1, 2022. The decision has been taken in this regard and a few new taxation measures are also on the cards.

Earlier, the government intended to promulgate the Ordinance during August but now it would be issued next month. The FBR is thoroughly going through the new taxation measures such as increasing the incidence of the FED on a few items, etc.

The Federal Board of Revenue (FBR) is also examining some new taxation measures which would be enforced through the said Presidential Ordinance.

The ordinance is likely to be promulgated by end August or start of September 2022.

Fixed tax decision deferment: Only an ordinance can help govt avert revenue loss

The Presidential Ordinance may increase the FED on sugary drinks to generate additional revenue in 2022-23. The income tax exemption for Pakistani diplomats serving abroad will be restored or a reduced rate of five percent may be charged.

The Presidential Ordinance may impose a very low rate of sales tax on a few zero-rated sectors and slight raise in the rate of the FED on cigarettes. Few procedural changes are also expected for the pharmaceutical sector.

Under the Presidential Ordinance, the government may give retrospective effect to a few measures for the traders’ community to collect sales tax on old rates. The old tax rates of sales tax through electricity bills for traders will be enforced during July-September 2022 to avoid revenue shortfall from the retail sector.

(i); the fixed tax scheme introduced through Finance Act, 2022 will be rolled back ab initio and the retailers will continue to pay taxes as per the previous (pre-budget) mechanism and rates.

(ii); for the next three months i.e. July to September 2022, the previous tax rates will continue to apply on the retailers.

(iii); the government will review the situation and will notify new tax rates effective from 1st October 2022.

(iv); for the reversal of the fixed tax scheme, necessary legislation will be enacted by the FBR as soon as possible.

Copyright Business Recorder, 2022