New Tax Measures
ISLAMABAD: The federal government has proposed some new tax measures in the budget which will generate around 900 billion rupees in additional revenue in 2023-24.
The federal government has announced 223 billion rupees in new tax measures for 2023-24.
In Feb 2023, the government imposed 170 billion rupees in taxes through the mini-budget. However, in the 2023-24 budget, the impact of the mini-budget will mop up around Rs660 billion in 2023-24.
Therefore, the overall tax revenue impact of measures including the mini-budget would be more than Rs900 billion in 2023-24.
The new tax measures are the imposition of the super tax on the superrich individuals with more than 150 million rupees per annum income.
Also, non-filers will pay a 0.6 percent withholding tax on the withdrawal of cash from banks.
Meanwhile, in the new budget, the government has reimposed a 10 percent withholding tax on bonus shares and supplies to be provided by contractors.
The new tax measures will enable the government and the FBR to achieve the 9.2 trillion rupees tax collection target in 2023-24.
Moreover, under the Finance Bill 2023, the government has imposed additional tax at the rate not exceeding fifty percent on income of profit and gains of a person or class of persons on account of extraordinary gains due to exogenous factors.
FBR chairman briefing to media
When the federal cabinet approved the budget, FBR Chairman Asim Ahmed told the media that 28 percent growth is required in tax collection to meet the target of Rs 9.2 trillion in 2023-24.
Asim pointed out that the revenue impact of (additional tax on certain income, profits, and gains) cannot be considered a new tax, but an enabling provision introduced in the law.
In the new budget, the income tax measures would generate Rs185 billion in additional revenue.
He said that the sales tax measures involved Rs22 billion collection while the customs duty measures will generate Rs13 billion extra revenue. However, 12 billion rupees relief in customs duty and taxes will create a net impact of one billion rupees.
FBR chairman also said that the government has increased the monetary limit of foreign remittances to USD100,000 for the purpose of section 111(4). The tax officials will not seek sources of unexplained income/assets for transactions.
Meanwhile, he explained that the super tax under section 4C will apply to all super-rich persons with income above Rs150 million a year.
Super tax on super rich individuals
There will be three new income thresholds for 2023-24 + Rs350m to Rs400m, Rs400m to Rs500m, and above Rs500m. And individuals falling in these income thresholds will have to pay six to 10 percent supertax.
Moreover, the government has increased to six percent withholding tax for commercial importers, from the existing 0.5 percent rate.
Also, five percent WHT will be charged to non-resident Pakistanis using debit/credit or prepaid cards abroad.
A two percent final withholding tax on immovable property purchases by non-resident POC/NICOP holders will be waived if purchased with foreign remittances.
Builders will receive a 10 percent reduction in tax liability or Rs5m, whichever is lower. Individuals constructing their own house will receive a 10 percent reduction or Rs1m, whichever is lower, for three years.
Moreover, the government extended tax exemptions for profits and gains on the sale of immovable property or shares of special purpose vehicles to any type of REIT scheme. This will be applicable to the FATA/PATA residents until June 30, 2024.