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RS4.75tr FEDERAL BUDGET 2017-2018 SUMMARIZED


Relief Burdens
Rs.32.5bn relief as Rs.1.2bn in customs, Rs.18.7bn in sales tax, FED & Rs.12.6bn in income tax provided Burden of Rs.120bn new taxes as Rs.47.4bn income tax, Rs.52.6bn sales tax, FED & Rs.20bn customs duty.
The tax rate for corporate sector was reduced to 30% from 31%, withholding tax for mobile phone subscribers reduced from 14% to 12.5%, allowed three years exemption on profits of a start-ups in information technology, along with exemption from levy of minimum tax as well as withholding tax (as recipient) is also being accorded to such start-ups. Super Tax extended for one more year. Super tax is levied on annual income over Rs.500m
The government exempted 3% advance tax on vehicles leased under Prime Minister’s Youth Loan Scheme. 5% W.H.T of purchase value of tobacco, minimum tax 1% enhanced to 1.25%
The threshold for payment of advance tax on the basis of latest assessed taxable income is being enhanced from Rs500,000 to Rs1,000,000 for the threshold of taxable income for individuals entitled to a deductible allowance in respect of education expenses incurred, which is being increased from Rs1,000,000 taxable incomes to Rs1,500,000. Tax on Dividend increased from 12.5% to 15%
The threshold for collection of advance tax from taxpayers having life insurance non-filers is being enhanced from Rs200,000 to aggregate amount of Rs300,000 per annum Tax on 10% Dividend from mutual funds increased to 12.5%
For filers of income tax returns, withholding tax on registration and transfer of motor vehicles having engine capacity up to 850cc, 851cc to 1000cc and 1001cc to 1300 cc is being reduced from existing Rs10,000, Rs20,000 and Rs30,000 to Rs7,500, Rs15,000 and Rs25,000, respectively. W.H.T for non-filers increased for various transactions payments made to residents and non-resident persons for sales, services, contracts, payments for prize bond, lottery, sale by auction, Commission, discount to petrol pump operators, etc.
The rate of 8% minimum tax on services by Pakistan Stock Exchange was reduced to 2%; the fixed rate of Rs5,000 per Haji extended for the tax year 2017, income of registered political parties exempted from tax, three charitable organizations — Gulab Devi Chest Hospital, Pakistan Poverty Alleviation Fund and National Academy of Performing Arts — exempted from tax, taxpayers allowed to revise withholding tax statements within 60 days, and chief commissioner can allow a taxpayer to file return despite refusal by commissioner. 3 new slabs introduced for Tax on interest income introduced
10% on Rs =<5m, 12.5% on Rs <5m to =<25m & 15% on >25m
The rates of withholding tax are being reduced to 2% and 2.5%, respectively, for companies and non-companies on fast-moving consumer goods, in order to protect the interest of small investors and to promote payment of dividends the condition regarding distribution of 50% of paid-up capital is being removed, exempted accorded to branchless banking agents operating under the Asaan Mobile Account Scheme from withholding tax on cash withdrawals made for the purpose of making payments to their respective customers. For Stock Market flat single rate of 15% for filers & 20% for non-filers & advance W.H.T for 2% for stock exchange brokers.
The limit for expenditure incurred by pharmaceutical companies on sales promotion, advertisement and publicity was being enhanced from 5% to 10% of turnover. W.H.T from 0.5% to 1% on sales made by manufacturers, wholesaler, dealers and distributors of electronics goods to retailers, and extended the scope of the tax to batteries as well. The manufacturers and commercial importers will collect 0.1% withholding tax on sale of batteries to dealers, distributors, and wholesales. Similarly, every distributor, dealer, wholesaler while making sales to retailers in respect of batteries are required to collect withholding tax at the rate of 0.5% of the amount of sales.
Exemption from customs duty extended on import of combined harvesters threshers up to five years old The government has enhanced regulatory duties on 565 items mostly eatables in the range of 5% to 15%
additional duty levied on cylinder head of motorcycles, and import of solar panels and related components were exempted from the condition of ‘local manufacturing’ till June 30, 2017 which is extended till June 30, 2018. Regulatory duty increased to 25% from 10% on betel nuts, and Rs200 per kg levied on betel leaves
The customs duty was reduced to 3% from 11% and removal of 5% regulatory duty on grandparent and parent stock of chicken, duty reduced to 3% from 11% on import of hatching eggs, reduced regulatory duty on aluminum waste or scrap from 10% to 5%, exempted 3% regulatory duty on raw skins and hiders, 16% on stamping foils, reduced duty to 11% from 16% on sheets for veneering rom, reduced duty to 3% from 20% on pre-fabricated modular clean rooms panels, exempt 3% duty on import of ostriches and reduced duty on fabric (non-woven) for pharmaceutical industry from 16% to 5%. while 10% and 20% regulatory duty levied on five to 10 years and more than 10 years old, respectively
The levy of 2% sales tax withdrew on lubricating oils, reduction in sales tax at the rate of 50% is available on import of Hybrid Electric Vehicles up to 1800cc and at the rate of 25% on Hybrid Electric Vehicles exceeding 1800cc. It is proposed to maintain reduction in sales tax at the rate of 50% on Hybrid Electric Vehicles having engine capacity up to 1800cc and restrict reduction at the rate of 25% on engine capacity from 1801cc to 2500cc only. Similarly, reduction is proposed to be provided on local supply of the two categories of Hybrid Electric Vehicles. Increase in Federal Excise Duty on cement Federal Excise Duty on cement is proposed to be enhanced from Rs1 per kg to Rs1.25 per kg. Enhancement of rates of Federal Excise Duty on cigarettes.
Sales tax exempted on premixes to fight growth stunting, exemption provided on vehicles for construction and development of Gwadar Port and Gwadar Free Zone, exemption on items for renewable sources of energy, and for conservation of energy, exemption on parts and components for manufacturing LED lights, sales tax withholding is proposed to be withdrawn on supplies from registered persons to other registered persons with the exception of advertisement services, reduced duty on telecommunication services from 18.5% to 17%. Steel sector is currently paying sales tax on the basis of consumption of electricity at the rate of Rs 9 per unit of electricity. The existing rate of Rs 9/unit of electricity is proposed to be enhanced to Rs10.5 and corresponding increase shall be made in ship breaking and other allied industry.
Mobile phones are chargeable to sales tax at the rates of Rs300, Rs1,000 and Rs1,500 per mobile phone set depending upon categories of mobile phones. It is proposed to merge sales tax rates of Rs 300 and Rs1,000 per set into Rs650 per set Retail sales of five export oriented sectors are chargeable to sales tax at the rate of 5% which was enhanced to 6%. It is proposed to levy 6% sales tax on commercial import of fabrics. Minimum sales tax at the rate of Rs425 per metric tonne is proposed to be provided for locally produced coal.
Penalties are proposed to be imposed on persons manufacturing, possessing, transporting, distributing, storing, selling non-duty paid/counterfeit cigarettes.  


Ramiz Imtiaz
Linkers Realty
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