ISLAMABAD    -    The federal government Friday introduced revenue generation measures worth of Rs355 billion in the annual budget for fiscal year 2022-23 to achieve tax collection target of Rs7.004 trillion. In the annual budget 2022-23, the government has increased the tax collection target for the Federal Board of Revenue (FBR) to Rs7.004 trillion for next fiscal year from Rs6 trillion of the current year. Chairman FBR Asim Ahmed informed the media that government introduced fresh tax generation measures worth of Rs355 billion and Rs6.649 trillion would be collected through tax policy measures (GDP growth and inflation rate).

The breakup of Rs355 billion showed that new tax measures worth of Rs28 billion has taken in customs duties, Rs60 billion sales tax and federal excise duty and Rs267 billion in income tax.

In revenue generation measures, the government has proposed to enhance Federal Excise Duty (FED) on locally manufactured cigarettes. It has also recommended enhancing FED on club, business, and first class travel by air from Rs10,000 to Rs50,000. Meanwhile, the FED on telecommunication services is enhanced from Rs16 percent to 19.5 percent.

The government has imposed a capital gains tax on immovable property held for up to 1 year at 15 percent, which will reduce by 2.5 per cent every year to 0 per cent after six years. Meanwhile, advance tax on purchase and buying of property has increased from one to two percent for filers and to five percent for the non-filers. All persons who have more than one immovable property exceeding Rs.25 million situated in Pakistan shall be deemed to have received rent equal to 5% of the fair market value of the immovable property and shall pay tax at the rate of 1% of the fair market value of the said property. However, one house of each individual will be excluded.

The government has proposed to impose tax on higher income persons. The government would charge 2 percent tax from all companies and AOPs who are earning Rs300 million or higher per year. It has also recommended increasing advance tax on cars above 1600cc. Furthermore, 2 percent additional advance tax would be charged in case of electric engine cars. Meanwhile, the government has increase the tax for non-filers from 100 percent to 200 percent for purchasing cars.

In the proposed budget 2022-23, the government has increased tax on vehicles from 850cc to above 3,000cc. It has recommended Rs10,000 tax on vehicles up to 850cc, Rs20,000 on vehicle from 851cc to 1000cc, Rs25,000 has been on vehicles from 1001 cc to 1300 cc and Rs50,000 on vehicles from 1301 to 1600 cc.  A tax of Rs150,000 is proposed on vehicles from 1601cc to 1800 cc and Rs2,00,000 million on vehicles from 1801 to 2000 cc. Meanwhile, a tax of Rs3,00,000 is proposed on vehicles from 2001cc to 2500 cc and Rs4,00,000 on vehicles from 2501 cc to 3000cc while Rs5,00,000 tax has been proposed on vehicles over 3000cc.

The government has also proposed to impose a heavy levy on the import of mobile phones. It is proposed to levy Rs100 on the worth US$30 mobile phones while a levy of Rs200 is proposed on mobile phones worth US$30 to $100. It is proposed to levy Rs600 on imported mobile phones worth US$200 and Rs1,800 on mobile phones worth US$350. It is proposed to levy Rs4,000 on the mobile phones worth US$500 and Rs8,000 is proposed on mobile phones worth US$700 and Rs16,000 levy on imported mobile phones worth more than US$701 and above.

In Finance Bill, the government has suggested to charge advance withholding tax from those sending remittances abroad via credit, debit and pre-paid cards. It would charge one percent withholding tax from filers and two percent from non-filers. However, the withholding tax on credit, debit and prepaid cards can be adjusted later on.

The banking sector has earned windfall gains due to higher interest rates and risk-free investment in Government securities. In order to capture the real tax potential, the tax rate on banking companies is proposed to be enhanced to 45% from the current 39% inclusive of super tax.

In relief measures, the government has increased the minimum taxable income limit to Rs1.2 million per year from 0.6 million amid to facilitate salaried class. Meanwhile, minimum tax bracket for small business persons has been raised from Rs0.4 million to Rs 0.6m. It has also reduced the tax on profits on investment on Behbood saving certificates, pensioners benefit account and Shuada family welfare account from 10 percent to 5 percent. The government has fixed income and sales tax system for retailers. The tax on small-scale retailers will range from Rs3,000-Rs10,000 and will be collected through their electricity bills.

It is proposed to exempt import and local supply of solar panels from sales tax. Besides, consumers using fewer than 200 units of electricity will be facilitated in obtaining soft loans on easy terms from the banks for the purchase of solar panels. In order to facilitate agriculture, it is proposed to withdraw sales tax on the supply of tractors, agricultural implements, and various seeds including wheat, rice, maize, sunflowers, canola, and rice.

It is proposed to extend complete exemption on import/ donations to charitable hospitals and local supplies including electricity to charitable/ non-profit hospitals with 50 or more beds.

The government has recommended new slabs for income tax. There would be no tax on annual income of Rs0.6 million and Rs100 tax on annual income in range from Rs0.6 million to Rs1.2 million. It has recommended 7 percent tax on income from Rs1.2 million to Rs2.4 million. Meanwhile, on income between Rs2.4 million to Rs3.6 million, there would be fixed Rs84000 tax along with 12.5 percent income tax. The government would charge tax of Rs2,34,000 fixed tax and 17.5 percent income tax on income between Rs3.6 million to Rs6 million. Furthermore, on annual income between Rs6 million to Rs10 million there would be fixed tax of Rs6,54,000 and income tax of 22.5 percent. It would charge Rs200,4000 fixed tax and income tax of 32.5 percent on income above Rs12 million.