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Huge Tax Relief Proposed to Boost the Industry in Budget for the FY2021-22

Huge Tax Relief Proposed to Boost the Industry in Budget for the FY2021-22

ISLAMABAD: The PTI government announced its third budget for the fiscal year 2021-22 that aims to reduce the input cost of several industries along with the tapping of online transactions and bring these under the Sales Tax (ST) net.

 

There have been unmatched relief measures in Customs Duty (CD), ST, and Income Tax (IT) for the industrial sector in wake of the propounded plan that illustrates how the government intends to meet the Rs 1,129 billion hike in the Federal Board of Revenue (FBR) target.

 

 The government aims to give away Rs119bn to industries and individuals as per the proposed plan, under the revenue relief changes discussed in the Finance Bill. The allocations are; Rs 42bn has been given in CD, 19bn in ST and Federal Excise Duty (FED) while Rs58bn in IT.

 

Moreover, locally manufactured small cars up to an engine capacity of 850cc are exempted from excise duty. They have also been a reduction in ST rate from 17pc to 12.5pc and withdrawal of value-added tax which makes it easily affordable for many buyers.

 

The government has proposed new income tax measures in the budget worth Rs51bn. The Rs65bn worth exemptions and concessions were withdrawn through an ordinance that has re-incorporated into the Finance Bill. Twelve withholding taxes have been withdrawn that include air travel, CNG, banking transactions, stock exchange, petroleum products, extraction of minerals, and international debit credit card transactions.

 

The government has proposed to introduce normal tax by scrapping the block taxation of property income, rental incomes and capital gains. These measures have been taken because the government intends to generate Rs10bn from all these three measures.

 

Additionally, it has been proposed to levy 7.5pc withholding tax on domestic electricity bills above Rs25,000 per month and no tax will be charged in case of existing on taxpayers list. Minimum tax rate reduction has also been proposed from 1.5pc to 1.25pc for all person, 0.75pc to 0.5pc refineries, 1.25pc to 0.25pc fast-moving goods sold by retailers and exempted for SEZ/TEZ.

The finance minister and reiterated to have made pro-people budget without regard to the IMF’s strict conditions that has proposed imposition of taxes on various sectors. The response by the economic pundits and masses has been somewhat satisfactory as there have been much tax relaxation rather imposition and that in the era of pandemic.

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