Taxation details for FY2020-21 outlined in Federal Budget
Tax details for FY2020-21 outlined in Federal Budget
ISLAMABAD (Dunya News) – Submitting the tax proposals of the Federal Budget 2020-21, Federal Minister for Industries and Production Hammad Azhar said it has been suggested to reduce the sales tax ratio from existing 14 percent to 12 percent on point of sale to provide relief to common people and shopkeepers in wake of COVID-19.
He said minimum tax on hotel industry has been reduced from 1.5 percent to 0.5 percent during the months for six months with effect from April. He said a mobile application has been introduced to facilitate salaried class to submit their tax returns, which resulted into an increase of 37 percent.
An automatic system has been introduced for filing of tax returns. He said seizures, as a result of anti-smuggling campaign seen a rise of 19 to 30 billion rupees.
Elaborating relief measures, the Minister said the upper limit for shopping without showing identity card has been increased from 50,000 to 100,000 rupees.
He said import of dietetic food for medical purposes will be exempted from sales tax, while exemption on import of medical equipment has been increased for further three months.
The Minister said Federal Excise Duty on imported cigarettes and tobacco is being increased from 65 percent to 100 percent, while e-cigarettes and other substitutes of tobacco have also been included in this list.
To discourage consumption of caffeine based energy drinks, FED is being increased from 13 percent to 25 percent.
He said it has also been proposed to impose tax on double cabin pick-up vehicles as per other cars as wealthy people use these pick-ups as status symbol.
The Minister said it has been proposed that all persons and association of persons are allowed to deduct expenses from property income to provide a level playing field and to remove discrepancies.
He said it has been proposed not to levy tax on cashing foreign remittances or transferring it to other banks.
Hammad Azhar said under Sections 231P and 234, advanced tax will not be collected on auto rickshaw, motorcycle rickshaw and motorcycle upto 200 cc.
He said in order to become withholding agents for individuals and partnership business, the existing limit of sales is being increased from 50 million rupees to 100 million rupees to facilitate small and medium enterprises.
Hammad Azhar said it has been proposed that one hundred percent additional tax is collected on school fees exceeding 200,000 rupees per year from persons who are not in Active Taxpayer List.
The Minister said as all banks do not have required system to deduct taxes on profits received by different persons, it has been proposed to collect withholding tax of 15 percent across the board on proceeds.
He said it has been proposed to provide exemption to donations given to specific institutions with certain terms and conditions to ensure their monitoring.
Hammad Azhar said a proposal is to reduce duration for withholding tax on sale of immovable property to four years from existing five years.
