Foreign Minister Dar Sets Mini-budget To Enable IMF funding
Foreign Minister Dar Sets Mini-budget To Enable IMF funding
ISLAMABAD: Finance Minister Ishaq Dar said in both houses of parliament on Wednesday that he will present the 2023 Finance Bill (Supplement), adding additional funds over the next four and a half months to meet the latest previous measures agreed with the International Monetary Fund. Outlined tax measures to raise Rs 170 billion. (IMF) secures early payment of approximately US$1.2 billion in installments.
Two measures, an increase in the Federal Excise Duty (FED) on tobacco and an increase in the General Sales Tax (GST) rate from 17% to 18%, were immediately implemented through a statutory regulatory order (SRO). The Federal Board of Revenue (FBR) expects him to generate Rs 115 billion from these two measures.
The Finance Act, commonly known as the mini-budget, will increase GST from 17% to 25% on 33 product categories covering 860 tariff items, including luxury mobile phones, imported food, decorations and other luxury items. is also proposed. However, you will be notified of this increase in a separate notification. The Finance Act will increase excise duty on cement from Rs.1.5 to Rs.2 per kilogram, a measure estimated to raise a further Rs.6 billion.
Excise duty on fizzy/carbonated beverages has been increased from 13% to 20% to raise an additional Rs 100 crore to the government.
A new excise duty of 10% on non-carbonated beverages such as mangoes, oranges, etc. and an additional tax of Rs 40 crore was proposed.
Excise duty hikes on business class, first class and club class tickets will cost the government an additional Rs 10 billion. A tax rate of 20% (or Rs 50,000, whichever is higher) is proposed on the price of the air ticket.
The government is also proposing a 10% withholding tax on events and gatherings held at wedding halls, marquees, hotels, restaurants, commercial lawns, clubs, community squares or elsewhere. The FBR expects that from this tax he will be able to raise Rs 20 crore out of Rs 10 crore.
Under income tax, the bill proposes a 10% withholding tax on over-the-counter sales and purchases of shares to record invisible transactions.
For imports of fully assembled mobile phones, the sales tax rate on mobile phones between $200 and $500 has been increased from 17% to 18%. However, a 25pc sales tax will be charged on mobile sets worth $500 or above. The increase in sales tax to 25pc from 17pc on luxury items will lead to an additional revenue collection of Rs4bn.
The luxury items that will be subject to 25pc sales tax in the category of food import include confectionary, jams and jelly, fish and frozen fish, sauces, ketchup, fruits and dry fruits, preserved fruits, cornflakes, frozen meat, juices, pasta, aerated water, ice cream, and chocolates.
Other categories of items are home appliances, cosmetics, crockery, pet food, private weapons and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, doors and window frames, travelling bags and suitcases, sanitary ware, carpets (except from Afghanistan), tissue paper, furniture, shampoos, automobiles, luxury mattresses and sleeping bags, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items like hair dryers, etc., and decoration/ornamental articles.
These measures proposed through the finance bill are in addition to earlier steps agreed upon with the IMF, including increasing electricity and gas rates and allowing a free-floating exchange rate. To offset the impact of inflation on the budget, the government has proposed increasing the allocation under the BISP welfare scheme from Rs.3.6 crore to a total of Rs.40 crore.
Shortly after the bill was submitted to Parliament and the Senate, the Treasury Secretary told reporters that the Senate’s recommendation on the bill will be submitted on Friday (tomorrow). The bill will be discussed in parliament on the same day, he said, adding that it is hoped that the bill will be passed.