The government is likely to increase Federal Excise Duty (FED) on certain excisable commodities including cigarettes and beverages in the next budget (2020-21), but may retain Rs 2 per kg FED on cement.
Official sources told Business Recorder here on Tuesday that Federal Board of Revenue (FBR) would continue with policy of gradual increase in the FED on excisable commodities in the next fiscal year. However, the FED on cement may not be increased under the government policy of providing special tax relief and incentives to businesses/industries related to construction sector and support low-cost housing projects such as Naya Pakistan Housing Project (NPHP).
The government had increased FED on cigarettes, sugar drinks and cement in the budget (2019-20). The customs duty exemption was also eliminated on the import of liquefied natural gas. From July 1, 2019, the government has increased/imposed regulatory duties on the import of 569 items.
In the budget (2019-20), the FED on cement was increased from Rs 1.50 per kg to Rs 2 per kg, aerated waters from 11.5 percent to 13percent and FED on cigarettes was also increased. Three-tiered structure of FED on cigarettes was replaced with two slabs on this item.
The FBR has finalized a simplified fixed tax scheme for developers and builders, offering 90 percent reduction in tax for low-cost housing schemes, particularly the Naya Pakistan Housing Authority (NPHA).
The broad contours of the scheme, according to sources, include: (i) national (central) jurisdiction of developers and builders; (ii) simplified return form; (iii) income computation on 'project-by-project' basis; (iv) dispute resolution committee; (v) no requirement for developers/builders to operate as withholding agent; (iv) tax rate of Rs 210 per square feet for commercial builders in Karachi, Lahore, Islamabad, Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta and other urban areas not specified; (vii) the tax rates shall be reduced by 90 percent for low-cost housing schemes, and; (viii) tax rate of Rs 210 per square feet for commercial developers (commercial plots) and requirement of independent certificate from NESPAK.
The meeting's participants discussed various suggestions on provision of loans for construction, uniform tax rates in provinces and enhancing public private partnership in the sector.
Copyright Business Recorder, 2019
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