Pakistan’s Budget 2023-2024:The Government imposes New Taxes of Rs.223 Billion.

 

Pakistan’s Budget 2023-2024 Presented By Finance Minister

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The Government imposes New Taxes of Rs.223 Billion

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To increase income collection, the government has enacted new levies totaling Rs.223 billion. These new regulations include the extension of the super tax to all industries and a 0.6% withholding tax on bank cash withdrawals. The administration has also suggested acquiring the legal authority to tax windfall gains earnings up to 50%. The Federal Board of Revenue (FBR) anticipates that the continuation of the taxing policies put in place in the February 2023 mini-budget would result in an increase in revenue of Rs.903 billion. With an extra Rs223 billion from supplemental income measures, this sum will be increased to Rs.680 billion for the entire financial year.

Targets for Revenue and Tax Relief

A net increase in revenue of Rs.880 billion would be realised in the forthcoming fiscal year as a result of the FBR's tax relief agreements totaling Rs.23 billion across four levies. The government aspires for a nominal growth rate of 24.3%, consisting of a real GDP growth rate of 3.5% and an inflation rate of 21%, to attain a revenue target of Rs.9.2 trillion in the 2023–24 budget. Along with the new taxing measures, the policies outlined in the previous mini-budget are anticipated to increase tax revenue and assist in reaching the intended goal of Rs.7.2 trillion for the current fiscal year.

Amnesty Programme and Tax Measures

To account for exchange rate changes, the FBR intends to raise the threshold for international remittances under the proposed amnesty plan from Rs.5 million to $100,000 or its equivalent in the tax year. Withholding taxes on cash withdrawals over Rs.50,000 would be applied, bringing in Rs.14 to 15 billion for the national treasury. The 2% final withholding tax will not apply to non-residents who possess a POC or NICOP and buy real estate overseas.

Federal Excise Duty (FED) has also been levied by the government on incandescent lights and energy-inefficient fans. Royalties and fees for technical services will also be added to the FED's broader definition of services. Edible goods sold in bulk under brand names or trademarks will now be subject to a sales tax of 18%, while the lower rate of sales tax for Point of Sale (POS) tier-1 businesses selling leather and textile goods will be raised from 12% to 15%. In the Islamabad Capital Territory (ICT), a 15% levy on electric power transmission services is being considered.

Increased Withholding Taxes and Changes Proposed

The FBR plans to raise the amount of withholding tax that is deducted on overseas payments made using credit or debit cards. Additionally, it has been suggested that businesses pay an adjustable advance fee of Rs.200,000 in order to issue or renew work licences for foreign domestic employees in Pakistan. In addition, the administration intends to impose a super tax on all industries rather than just a few, although the specifics and date of implementation have not yet been determined.

All persons with incomes over Rs.150 million would be subject to the super tax under Section 4C, with the introduction of three additional income bands. Tax rates of 6%, 8%, and 10% will be applied to incomes between Rs.350 million and Rs.400 million, Rs.400 million and Rs.500 million, and beyond Rs.500 million, respectively. In addition, the government has increased the withholding tax rates on the sale of products, the performance of contracts, and the provision of services by 1%.

Conclusion

By adding new taxes, the government hopes to increase revenue collection and reach its fiscal year 2020 objective. The planned inclusion of windfall gains in the tax net, the increase in the super tax, and withholding taxes are some of these initiatives. These taxation policies may affect a range of industries and people, but they are necessary for the government's financial management and long-term economic stability.