ISLAMABAD: The federal cabinet today approved the mini-budget (supplementary finance bill) 2021 paving the way for increase in the General Sales Tax (GST) rate to 17 percent on 150 items including computers and smartphones.
The mini-budget and the State Bank of Pakistan (SBP) Autonomy bills were presented in the National Assembly amid tension and protests of the opposition.
The NA session has been scheduled to begin at 4pm Thursday. The opposition parties have vowed to block both bills.
Prime Minister Imran Khan chaired the cabinet meeting which approved the supplementary finance bill. Some of the coalition partners had earlier expressed reservations over the bill.
Finance Minister Shaukat Tarin briefed the cabinet members about the supplementary finance bill.
Prime Minister is about to chair the parliamentary party meeting of his Pakistan Tehreek-e-Insaf (PTI) and its coalition parties, SAMAA TV’s Abbas Shabir reported.
The mini-budget will abolish several tax exemptions, leading to an increase in the prices of 150 items.
Rs1300 billion tax exemptions have been extended to various sectors for many years including Rs578 billion in sales tax exemptions, and the mini-budget will withdraw tax exemptions of Rs350 billion worth, SAMAA TV’s Shakeel Ahmed reported.
Sales tax would be imposed on the 150 items in question, he said.
Imported smart phones could be taxed at the rate of 17% while the tax rate on imported vehicles could be increased to 17% from the current 12.5%.
The government plans to withdraw the incentive on electric vehicles (EVs) which will be taxed at the rate of 17%, Shakeel Ahmed revealed.
The sales tax on electric vehicles is currently set at 5% as a part of the government policy to promote clean energy.
Imported infant formula (baby milk), imported food items including biscuits and cheese, computers, and cosmetics will also become expensive.
Under the mini-budget a withholding tax of 10% will also be introduced on IT related products. This, coupled with the sales tax, could lead to a sharp increase in the prices of computers. However, Federal IT Minister Aminul Haq on Wednesday said that he has opposed taxes on computers.
The government also plans to increase income tax on phone calls to 15% from the current 10%.
