Budget 2024;Mobile phones, hybrid cars, cement, property, become expensive
Aurangzeb announces upto 25% increase in salaries, 15% in pensions of employees,
Islamabad(Mudasser Chuhdary)- Mobile phones, hybrid cars, cement, property have become expensive while solar panels have become cheap as the federal government presented the annual budget for the Fiscal Year 2024-25. The government has suggested increasing the rate of GST on the TIER-I retailers of textile and leather from 15 per cent to 18 per cent.
“This will be applicable to the branded and expensive items of leather and textile,” Finance Minister Muhammad Aurangzeb said. “This text has been imposed on a section that affords to buy such expensive items. It will not affect the common citizen.”
The government has recommended keeping mobile phone tax at an 18% standard rate. It would be applicable to different categories of mobile phones.
“Concessionary rates create distortions by only benefiting some specific items in the market while the standard rate ensures that everyone gets equal opportunity and market forces work effectively.”
Withholding tax on copper, coal, paper, plastic scrap
The federal government also announced its decision to impose withholding tax on copper, coal, paper, and plastic scrap.
It added that such sectors were disorganised and their contribution to the national exchequer was close to none. The government has recommended that iron and steel scrap should be exempted from taxes. “It has been seen that registered persons buy scrap from the market without charging the sales tax. This means they don’t have input tax. According to this, they can adjust the output tax,” he said.
Aurangzeb added that fake invoices are being made to overcome such a problem. “To end this trend, it is recommended giving an exemption to iron and steel scrap from sales tax.”
Receiving advance tax
The federal government has decided to change the basis of advance tax on the purchase and registration of vehicles.
Under the current system, the advance tax on the sale and purchase of vehicles up to 2,000cc is levied based on the engine capacity. The minister noted that a significant increase has been seen in the prices of vehicles over the years.
It was recommended that the advance tax should be based on the price of the car rather than its engine capacity.
Punishment for selling fake cigarette
The federal government has recommended strict punishments for retailers selling cigarettes without tax stamps, including sealing their shops. Acetate tow is a basic element used in the production of cigarette filters. The finance minister recommended imposing Rs44,000 worth of federal excise duty (FED) on acetate tow.
“It will have no additional impact on the formal sector whereas the informal sector will give the FED,” it said. Currently, the Rs2/kg FED is being charged on cement and the government has recommended that it should be increased to Rs3 per kg. The government has recommended imposing five per cent FED on new plots, residential and commercial plots to stop speculation and bring stability to the real estate sector.
Budget 2024-25: New Property Tax Rates Proposed in Upcoming Budget with Filer vs. Non-Filer Rates
Locally manufactured solar panels to become more affordable
In a move aimed at promoting the domestic solar panel industry, the federal government has decided to offer tax concessions on the import of raw materials and components used in the manufacturing of solar panels, inverters, and batteries.
Aurangzeb said that in order to reduce the country’s dependence on imported solar panels and conserve precious foreign exchange, the government has decided to provide tax incentives for the local production of solar panels, inverters, and batteries.
Import duty exemption on hybrid vehicles to be discontinued
In a move aimed at supporting the domestic automotive industry, the government has decided to discontinue the customs duty concession on the import of hybrid vehicles.
“The custom duty exemption on hybrid vehicles was introduced in 2013 due to the significant price difference between hybrid and conventional cars driven by technological advancements,” he said. “But this price gap has now narrowed, and the local production of hybrid vehicles has also commenced.”
The finance minister stated that the government is now withdrawing this concession to promote the growth of local manufacturing.
Government proposes increased petroleum levies on fuel purchases
The government has proposed to increase the petroleum levy charged to consumers on the purchase of petrol and diesel, a move aimed at generating additional revenue for the exchequer.
Under the new proposal, the federal government will impose a petroleum levy of up to Rs80/litre on diesel and petrol.
Budget 2024-25: Govt employees to get THIS much salary increase
The petroleum levy is set to remain at the current rate of Rs50 per litre on kerosene oil, however, for light diesel oil, the levy is proposed to be increased from the existing Rs50 to Rs75 per litre.
Similarly, for high-octane fuel, the petroleum levy is suggested to be raised from the current Rs50 to Rs75 per litre. The same increase, from Rs50 to Rs75 per litre, is proposed for E-10 gasoline as well.
The government has also recommended maintaining the current petroleum levy of Rs30,000 per metric ton on domestically produced liquefied petroleum gas (LPG).
The government has suggested imposing a Rs15 per kg FED on sugar manufacturers, effectively increasing the cost of the essential commodity.
Additionally, the exemption previously granted on the import of fruits and dried fruits has been withdrawn, meaning consumers will now have to bear the full cost of these items.
The review of concessions on the import of household goods is also part of the Finance Bill.
Pakistan made impressive progress despite substantial challenges: Minister
Our progress on the economic front has been excellent,” the minister stated during his budget speech in the National Assembly. “Today, nature has given Pakistan the opportunity to follow the path of economic development, and we cannot afford to waste this opportunity.”
He acknowledged that the economy had faced severe difficulties a short while ago, with the rupee devaluing by Rs40 in one year and inflation pushing many people below the poverty line. However, he emphasized that the IMF Standby Arrangement had paved the way for economic development, and the country is now moving in the right direction. He noted that inflation is decreasing and is expected to decline further in the coming days.
Highlighting investor interest, the minister noted, “Investors are looking for investment opportunities in various sectors. With the achievements of the last year, the country has come out of crisis. We have to achieve the goal of economic self-sufficiency. Pakistan will soon return to stable growth.”
He stressed the need for economic reform, stating, “The road is hard, and our options are limited. It’s time for reform. Private investment should be prioritized in the economy. In the past, the state was burdened with unnecessary expenses, leading to inflation. We have to promote exports and take bold steps to bring about changes in the economic system.”
Aurangzeb also emphasized the importance of public welfare and the need for energy sector reforms. He revealed that discussions are ongoing for another program with the IMF, focusing on reducing the budget deficit, increasing income, and cutting unnecessary expenses. The government plans to restructure and privatize State-Owned Enterprises (SOEs) to improve efficiency.
“In the past year, inflation was at 38%. A better economic strategy has reduced inflation, and the government aims to bring it down to single digits,” he added.
Tax reform is a critical aspect of the government’s economic strategy. The minister mentioned that Prime Minister Shehbaz Sharif was closely monitoring reforms in the Federal Board of Revenue (FBR) and is committed to expanding the tax net. Efforts to bring more people into the tax net will be intensified in collaboration with provincial governments.
Reforms in the pension system are also underway, and the government is considering eliminating vacant posts within the federal government. Additionally, the PM has ordered the closure of the Pakistan Public Works Department (PWD) to streamline government operations and reduce expenses.
