ISLAMABAD: The government has announced a significant relief in taxes for agriculture sector, beverage industry, pesticides as well as an incentive package for industry to be established for manufacturing of mobile phones. Finance Minister Ishaq Dar in his winding up speech on general discussion on budget 2015-16 announced a reduction in GST from 17 percent to 7 percent (non-adjustable) as well 5 percent cut in ST on oil seeds and removal of customs duty on import of oil seed.
The minister also announced an increase in PIU (Per Indent Unit) for taking loan up to Rs 4000 and establishment of a Rs 20 billion fund with equal contribution by federal government and provincial governments to subsidise phosphate and potash fertilisers for increasing productivity of land. The Finance Minister also announced withdrawal of 5 per cent sale tax on poultry feed supplies locally but imposition of a 5 percent sales tax on import of such feed.
-- Government announces relief, accepts numerous Senate recommendations
To facilitate beverage manufacturers, the government has cut federal excise duty on beverages to 10.5 per cent from 12 per cent. The government has announced a tax incentive package for cellular phone industry for manufacturing of mobile phones. Under the package, income tax exemption would be available for a period of five years, a 90 percent deprecation allowance for plants and machinery during the first year, customs duty and sales tax exemption on the import of plants, assembly line machinery and equipment.
The government has accepted the demand of the mutual fund industry that the income of Mutual Funds would not be subjected to the Workers Welfare Fund (WWF). The government has also decided to allow export of perishable items from Balochistan to Afghanistan in Pak rupee instead of dollars. According to the government, Hajj operators will continue to enjoy certain exemptions of the Income Tax Ordinance in 2015. The Finance Minister also announced an increase in withholding tax on advertisements of print and electronic media for non-filers to 12 percent and 15 percent for corporations and individuals, respectively, and a decrease from 10 to one percent for filers.
On the pattern of KPK, industries to be established in Balochistan from 2015-12018 would be exempted from taxes including turnover tax. The income tax exemption to Halal meat units has been extended up to June 30, 2017. A 0.6 percent withholding tax on all banking instruments of non-filers would not be applicable up to a transaction of Rs 50,000. Dar also stated that a 7.5 percent increase in government employees' salary would be applicable after the merger of previously allowed two ad hoc increases.
The Finance Minister also stated that the capital gains derived from trading of commodity transactions on Pakistan Mercantile Exchange (PMEX) would now be subjected to advance adjustable income tax at the rate of 0.0.5 percent instead of 0.1 percent. He added that he would announce some changes as well as clarifications to remove confusion about budgetary proposals for the next fiscal year. He said that the government wants to evolve national consensus on economy and has been underscoring the need for signing a charter of economy by all the political parties for the benefit of the country.
Dar said that as many as 92 budget proposals have been received from Senate, of which 20 have been fully accepted, 21 partially while 15 in principle but the implementation of 36 was not immediately possible. The Finance Minister vehemently and repeatedly stated during his speech that the budget was not pro-rich and cited various budgetary measures to prove his point. He said the government believed that the budget must not be regressive and measures have been taken to move towards direct taxation to pass on the burden to the rich class.
"Are an increase in BISP allocation to Rs 102 billion, allocation of Rs 4 billion to Bait-ul-Mall, withdrawal of Rs 120 billion tax exemptions and Rs 9 billion for insurance scheme for rich or poor?" Dar asked and insisted that "budget is pro-poor, not pro-rich". The Finance Minister said that agriculture credit has been increased to Rs 600 billion for the next fiscal year and a decision has been taken to raise less than 2 per cent of the GDP allocation on education to 4 per cent by 2018, and measures would be taken to revive the BISP in private sector for provision of institutional financing. The Minister further stated that Rs 136 billion supplementary grants for the next fiscal year are less than 4 per cent of the budget due to extra subsidy on electricity, subsidy to fertilizer and sugar as well as Rs 45 billion for temporary displaced persons (TDPs). Dar said supplementary grants in the past had also been recorded at 23 per cent of the budget.
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