TAX NEWS - JUNE 2010

Pakistan Tax: Tax measures to yield additional Rs133bn

Pakistan taxation measures announced in the federal budget 2010-11 on Saturday will yield an additional revenue of Rs133 billion.

This includes Rs83 billion against new taxes and Rs50 billion from administrative measures, explained Chairman Federal Board of Revenue (FBR) Sohail Ahmed following the announcement of federal budget by Adviser on Finance Dr Hafeez A. Shaikh in the National Assembly.

Though the government set the revenue target at Rs1,667 billion for the fiscal year, FBR Chairman said collecting the revenue of Rs1530 billion would be normal. "Unprecedented relief" has been given in the income tax regime, he added.

The additional tax measures are part of the plan devised by FBR in the event of non-enforcement of VAT bill. However, FBR officials explained that these tax measures would be withdrawn once VAT is enforced possibly from October 1.


RELIEF IN PAKISTAN INCOME TAX:

Talking about relief measures, Member Direct Tax Asrar Raouf said that the limit of basic exemption has been proposed to be raised from Rs200,000 to Rs300,000 for salaried taxpayers, and for businessmen from 100,000 to Rs300,000.

This exemption will benefit 750,000 taxpayers while the government will lose Rs3 billion, he said.

It has been proposed that the maximum rate of advance tax deductible on monthly electricity bill be reduced from 10 to 5 per cent on the amount of bills. The measure has been proposed for the benefit of industrial and commercial consumers of electricity.

Senior citizens of Pakistan of the age of 60 years or more will be eligible for relief of 50 per cent of tax on their income, if their income does not exceed Rs100,000 as compared to existing maximum limit of Rs75,000.

In pursuance of PM's relief package to rehabilitate economy of Khyber-Pukhtunkhwa, FATA and PATA, some amendments have been proposed to be introduced in the income tax law. These measures will provide relief to industrial taxpayers hailing from areas affected by militancy.

A uniform tax rate has been proposed to be levied to strengthen the drive for documentation. The Federal Board of Revenue (FBR) will get revenue of Rs3.5 billion against this measure, explained Mr Raouf.

Advance tax deductable on imports made by commercial importers is proposed to be enhanced to 5 per cent as final tax.

Tax on capital gains accruing on account of holdings of stocks / shares / securities for six months or less is proposed at the rate of 10 per cent while holdings of stocks/ shares/securities exceeding six months is proposed at 7.5 per cent. However, no tax has been proposed on such capital gains for a holding period exceeding 12 months.

In order to rationalise and simplify slab rates advance tax deductible on goods transport vehicles are proposed to be abolished and in their place, tax is proposed at the rate of one rupee per kg of the laden weight capacity of goods transport vehicle. The government will earn revenue of Rs2.5 billion against this head.