ISLAMABAD: President Arif Alvi will anytime promulgate Tax Laws Amendment Ordinance 2022 to increase the Federal Excise Duty (FED) of Rs 36 billion on cigarettes and other measures including withdrawal of fixed tax on retailers imposed through the electricity bills under the Finance Act 2022.
The Ordinance will amend provisions of the Finance Act 2022 to bring necessary changes in the income tax, sales tax and FED laws. The Ordinance has amended Income Tax Ordinance 2001, Sales Tax Act 1990 and Federal Excise Act 2005.
The Federal Board of Revenue (FBR) Headquarters was opened on Saturday and Chairman FBR and relevant FBR Members visited the Ministry of Finance on Saturday to give final touches to the Ordinance. After vetting from the Law Division and approval of the Ordinance from the Federal Cabinet through circulation, the President will sign any time the Ordinance.
Federal cabinet gave approval of the said Ordinance on Saturday.
Under the Ordinance, the capital value tax (CVT) on commercial vehicles has been withdrawn.
It is learnt that the FBR has not withdrawn the tax on immovable properties on deemed income basis imposed through the Finance Act 2022.
The FBR will charge variable taxes to traders, starting with 5 per cent sales tax and 7.5 per cent income tax will remain in place for three months for all traders. From October 1, 2022, these taxes would be on consumption of 50 units, after which these taxes would gradually increase for higher consumption units. Instead of fixed tax on retailers that will reduce revenue of Rs. 42 billion, the government will now revert to the old system of ad valorem tax. This will result in a reduction in FBR revenue of Rs. 15 billion. The amount will be compensated by imposing taxes on tobacco and cigarettes of Rs. 36 billion.
The FBR has proposed zero percent sales tax on the import and local supplies of pharmaceutical raw materials and active ingredients. The one percent sales tax imposed on pharmaceutical raw materials and active ingredients would be abolished under the proposed Ordinance. The refund of sales tax paid on the inactive pharmaceutical raw materials would be refunded to the companies.
Copyright Business Recorder, 2022