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Major Revenue and Relief Measures Budget 2016-17

Islamabad, June 03, 2016 (PPI-OT):Tariff slabs reduced from existing 5 to 4 by merging 2% slab and 5% slab in new 3% slab. Corporate tax rate has been reduced to 31% for Tax Year 2017. In sales tax turnover threshold for cottage industry has been increased to 10 million. Introduction of optional regime for Tier-1 Retailers according to which sales tax at fixed rate of 2% of their total turnover without any input tax adjustments is proposed.

Exemption of sales tax on pesticides and 5% sales tax on fertilizers. Exemption to machinery and equipment for the development of grain handling and storage facilities to include silos as well. Relief in customs duty for Cool Chain Machinery. Income Tax, Customs And Sales Tax exemptions under Gwadar Port Concession Agreement for operation and development of Gwadar Port and Gwadar Free Zone.

Zero-rating of five export oriented sectors. Specified items for these sectors and the purchase of energy i.e. electricity, gas, furnace oil and coal by the five export-oriented, have been subjected to zero-rate of sales tax.

Various tax credits including tax credits under section 65B, 65D and 65E and enhancement of tax credit for employment generation are proposed to be increased. Period for these credits are also proposed to be extended. Deductable allowance for education and tax credit for health insurance is also proposed to be introduced.

Concessions of CD for Dairy, Livestock and Poultry Sectors from 5% to 2%.

Concessions of CD for Fish Farming, fish feed pellet (floating type) machines from 5% to 2%, fish / shrimp feed 10% and 20% to 0%.

Exemption of sales tax on import of Laptops and PCs.

Exclusion of Second hand and Worn Clothing from further tax levy.

Revenue Measures

Super tax was levied for the tax year 2015 to meet revenue needs for certain unforeseen expenditure by the government. Since the circumstances still persist, it is being extended for tax year 2016.

A final tax is being imposed on builders and land developers on the basis of per unit area.

It is proposed to extend the holding period for taxation of capital gain on sale of immovable property from two years to five years to be charged at uniform rate of tax of 10%.

For persons registered with provincial sales tax authorities, it is proposed that an advance tax at 3% of turnover of non-filer service providers be collected by provincial ST authorities along with their sales tax returns.

It is proposed to withdraw zero-rating on milk and fat filled milk. Zero-rating on preparations for infant use proposed to be retained.

In order to maintain neutrality it is proposed that Minimum tax may be charged on companies declaring gross loss.

It is proposed that minimum tax @ 1% of turnover may be made payable by Individuals and AOPs having turnover exceeding ten million rupees.

It is proposed to withdraw zero-rating on stationery items and their inputs.

Continuing with the policy of differential taxation for filer and non-filer, various sections are included with higher withholding tax rates for those not filing income tax returns

Enhancement of rates of Federal Excise Duty on cigarettes. The rates of FED on cigarettes are proposed to be increased on a bi-annual basis

Enhancement of Federal Excise Duty on Aerated Waters to 11.5% of retail price.

It is proposed to replace the current regime with fixed rate basis and to charge FED on cement on fixed rate basis @ Rs. 1/ kg.

It is proposed to replace this Federal Excise Duty on sugar with levy of sales tax at reduced sales tax rate of 8%.

Inclusion of mineral/bottled water in the Third Schedule to the Sales Tax Act, 1990, so that the tax is charged on the basis of retail price.

Enhancement of fixed rate basis on steel sector, ship breakers and steel melters.

Increase in the rate of sales tax on import of Mobile Phones.

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +92-51-9252323 and +92-51-9252324
Fax: +92-51-9252325 and +92-51-9252326
Email: piopid@gmail.com

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