Saturday Jun 12, 2021
The federal government on Friday unveiled a "people-friendly" budget with a total outlay of Rs8,478 billion and an ambitious tax target of Rs5,829 billion.
But that's macro-finance. How will the new budget affect the common citizen?
The PTI-led government has decided to introduce an additional Rs116 billion by way of income taxes, while also providing Rs58 billion worth of relief, according to the finance bill issued today.
Additional taxes of Rs215 billion by way of sales tax and federal excise duty have also been proposed in the bill, while relief worth Rs19 billion is also included.
The bill states that mobile phones worth Rs270 billion can be imported in the next year. The government will also impose a regulatory tax of Rs16 billion on mobile phone imports.
Sales tax on locally assembled cars of up to 850cc engine capacity has been reduced from 17% to 12.5%, while the FED on such cars has been abolished.
The customs duty on imported luxury goods has been hiked by a further 11% — which will make women's makeup, shampoos, imported food item, and perfumes more expensive. The government looks to earn Rs11 billion with this hike in customs duty.
To promote locally developed electric vehicles, the Federal Bureau of Revenue will reduce the sales tax imposed on them from 17% to 1%.
The finance bill also proposes an increase in the prices of internet packages, mobile phone calls, and SMS.
However, after the finance minister presented the budget, Federal Minister for Energy Hammad Azhar clarified Prime Minister Imran Khan and the federal cabinet had not approved the FED levy on internet data usage and so it will not be part of the final draft of the finance bill.
Meanwhile, Rs1 tax on phone calls exceeding 3 minutes and Rs0.10 tax on each SMS will result in an income of Rs100 billion for the government.
Taxes worth Rs11 billion will also be imposed on online shopping.
FBR has also imposed Rs1 per kg additional tax on sugar, while further taxes have been imposed on imported cigars and electric cigarettes.
Moreover, in a bid to avoid the petrol crisis, the government has decided to build more warehouses for storing petrol.
The government has also exempted tax on the paper used for publishing the Holy Quran.
For industries, import of raw materials will see a relief of Rs12 billion in custom duty. For chemical industries in particular, relaxations worth Rs6 billion are also included in the bill.