Budget Pakistan 2023-24
Pakistan News

What Actually New Budget 2023-24 Is For ???

What Actually New Budget 2023-24 Is For ???

June 10, 2023 / By Zunair Tahir / Pakistan News


The budget for fiscal year 2023–24, like the majority of recent budgets, places a significant emphasis on borrowing money to finance expenditures, despite the fact that a sizable portion (more than 50%) of current expenses go towards debt payment.

Despite a narrative that indicates otherwise, the process taken to create this year’s budget wasn’t particularly novel, but some of the actions were.

The government has significantly raised the amount of money that may be sent from outside Pakistan without any questions being asked about the source, which is one of them.

A “bar on asking nature and source of unexplained income/assets” is proposed to be placed on this ceiling, which would be raised from Rs5 million to $100,000 (approximately Rs30 million). This action is most likely an effort to increase the nation’s diminishing foreign exchange reserves, which are now less than $4 billion and barely cover a month’s worth of imports.

In an effort to stop the flow of dollars out of the nation, the administration has also suggested raising the withholding tax rate on payments made to “non-residents through debit/credit or prepaid cards” from 1 to 5 percent. If this proposal were to be ultimately accepted, all foreign online purchases (including those from Netflix and Amazon) would become more expensive.

Another new initiative put up by the finance minister aims to make it easier for small and medium-sized businesses (SMEs) to receive bank loans.

Ishaq Dar brought up a central bank program that allows SMEs to refinance their debts at a 6 percent markup during his address. But he emphasized that banks are reluctant to lend to SMEs since they frequently lack a credit history.

The finance minister stated that this will be fixed by the government taking up 20% of the risk for loans made to SMEs under this program.

The budget for this year also included incentives for IT experts and services, giving Pakistani freelancers who provide IT services to overseas businesses the status of a cottage industry. Therefore, independent exporters won’t need to submit a sales tax report.

Additionally, “old and used vehicles of Asian makes above 1300cc” imports are no longer subject to set duty and tax ceilings.

This implies that reconditioned 1300cc automobiles from China and Japan, which have a considerable market in Pakistan, would probably cost more. Smaller vehicles like the Mira and Alto would not be impacted by this change.

The budget for this year also included incentives for IT experts and services, giving Pakistani freelancers who provide IT services to overseas businesses the status of a cottage industry. Therefore, independent exporters won’t need to submit a sales tax report.

Additionally, “old and used vehicles of Asian makes above 1300cc” imports are no longer subject to set duty and tax ceilings.

This implies that reconditioned 1300cc automobiles from China and Japan, which have a considerable market in Pakistan, would probably cost more. Smaller vehicles like the Mira and Alto would not be impacted by this change.

The budget offered, among other important sales tax or customs duty exemptions:

Customs tariffs on nappy and sanitary product raw components are exempt.
Customs charges on prawns, prawns and juveniles imported for breeding in industrial fish farms and hatcheries are exempt.

The prohibition on buying second-hand clothes has been lifted. The exemption of contraceptives and their accessories from sales tax.

For nonresident individuals who possess a National Identify Card for Overseas Pakistanis/Pakistan Origin Card and purchase real estate using foreign remittances sent from overseas, there is a 2 percent final withholding tax exemption.

For a builder, a 10% tax liability reduction or Rs. 5 million, whichever is less, and for a person, a 10% tax liability reduction or Rs. 1 million, whichever is less, for three years of self-construction of a home.

In contrast, there were several actions that may affect the average person’s finances:

The elimination of the sales tax exemption for foods sold in large quantities under brand names or trademarks.

An increase in the lower rate of sales tax on supplies produced by point-of-sale shops selling leather and textile items from 12 percent to 15 percent.

The suggested tax rate for electric power transmission services is 15%.

0.6 percent advance adjustable withholding tax will once again be applied to cash withdrawals made by inactive taxpayers.

An increase in the rate of withholding tax on payments made to non-residents using debit, credit, or prepaid cards from 1 percent to 5 percent. (Taxpayers who are not active pay two to ten percent).

It is suggested to impose a federal excise levy of Rs 2,000 per energy-inefficient fan and Rs 20 per cent of the value on incandescent bulbs.


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Automotive News

President Empowers Suzuki Customers to Get a Refund Of Up to 12% Of Their Sales Tax Overpayment

President Empowers Suzuki Customers to Get a Refund Of Up to 12% Of Their Sales Tax Overpayment

March 17, 2022 / By Zunair Tahir / Automotive News Pakistan

President Arif Alvi has supported the Federal Tax Ombudsman’s (FTO) decision to refund more than 12.5 percent of sales tax collected from Suzuki car customers.

Pak Suzuki was sued under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) for collecting 17 percent sales tax on 998cc automobiles in August 2021, despite the fact that the real rate at the time was 12.5 percent. As a result, taxpayers were compelled to pay more than was truly owed.

The judgement was confirmed by Pakistan’s President, who dismissed FBR’s appeals against the return suggestion. FTO Dr Asif Mahmood Jah, speaking during a press conference, said:

“The President’s directive will assist customers around the country who paid an excessive amount of Sales Tax from Suzuki car purchasers.”

The complainants ordered 998cc automobiles in advance of June 2021, paying a total of Rs 2.145 million in advance, with an estimated delivery date of July 2021. Meanwhile, by the Finance Act of 2021, the rate of Sales Tax on such automobiles was reduced from 17 percent to 12.5 percent, and the FED charged at 2.5 percent was abolished entirely, with effect from July 1, 2021. Furthermore, the word “time of supply” was changed from “time of sale” to “time of delivery” in Section 2(44) of the Sales Tax Act of 1990.

The automobiles were delivered to the complainants together with an invoice for Rs 2.069 million, which reflected the revised rate in effect after July 2021, rather than the rate in effect when the car was booked in June 2021. However, the firm assessed Sales Tax on the previous rates rather than the invoice date “the time of sale” and refused to refund the difference, denying Middle-Income Complainants the full benefit of the lower tax burden. The complaint also contacted FBR through email on its hotline, asking a reimbursement of the difference in sales tax.

The FBR responded by sending an email stating that sales tax on automobiles up to 1000cc had been decreased to 12.5 percent. However, the FBR did not fix the matter by arranging for a reimbursement of the sales tax difference. According to the FBR:

“At the time of reserving the car in June 2021 and its delivery in August 2021, there was a lack of clarity on the term of “time of supply.” The appropriate period for establishing the rate of taxes was when payment was received by the provider, according to the definition in June 2021, when Sales Tax was 17 percent and FED was 2.5 percent. However, in the budget 2022-2023, both the definition and the applicable tax rates were changed, and now “supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply” means “the time at which the goods are delivered or made available to the recipient of the supply.”

Despite the fact that the act’s amendments were meant to assist taxpayers, the objections were dismissed. The Federal Tax Ombudsman has issued instructions to all advisors to decide all similar cases in accordance with a decision by the President of Pakistan, and FTO hopes that the Federal Bureau of Revenue will ensure prompt compliance with the President’s directives, as the decision has a far-reaching impact by providing relief to not only the complaints but many others who may not have so far opted for such relief, FTO added.


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