WEB DESK: The government has taken taxation measures of Rs 40 billion by imposing a 5 to 10 percent regulatory duty (RD) on the import of 350 luxury and non-essential items, one percent additional customs duty across the board on all tariff slabs, an increase in Federal Excise Duty (FED) on cigarettes and a raise in fixed duty on import of old and used vehicles (above 1000cc) from December 1, 2015.
The new revenue generation measures were announced by Finance Minister Ishaq Dar at a press conference held at the Federal Board of Revenue (FBR) here on Monday.
Dar also announced a one-month extension in date for filing of income tax returns and applicability of 0.3 percent concessionary rate on banking transactions of non-filers till December 31, 2015. He said an RD has been imposed on the items consumed by “rich class” and no duty has been raised on goods used by general public. The Finance Minister said that one percent additional customs duty will also be applicable on the imports under Free trade Agreements (FTAs) and Preferential Trade Agreements (PTAs).
The 61 new items have been subjected to a 5 to 10 percent RD at import stage having a revenue impact of Rs 4.5 billion. The RD (5 percent) has been increased on the import of 289 items with an estimated revenue of Rs 4.5 billion. The increase in the rate of the FED on higher and lower slabs of cigarettes would have a revenue impact of Rs 6.5 billion; a one percent additional customs duty across the board would generate Rs 21 billion and increase in the fixed amount of customs duty in US dollars would generate an additional revenue of Rs 2.5 billion.
He said the government has taken Rs 40 billion additional revenue measures to bridge a revenue shortfall for the first quarter (July-September) 2015-16. A five-10 percent RD has been imposed on 61 items on which first time RD has been levied. A five percent RD has been imposed on 289 items, on which RD was already applicable. Thus rate of RD has been increased from 5 to 10 percent, 10 to 15 percent and 15 to 20 percent on these items.
He said the government has imposed a one percent additional customs duty across the board at import stage. However, items not subjected to a one percent additional customs duty included all non-dutiable imports; agricultural machinery, essential raw materials and inputs for agricultural/pharmaceutical/textile/aviation sectors, socially sensitive items like vegetables etc, and other priority industrial sectors like renewable energy, coal mining, which have been given concessions under Fifth Schedule of the Customs Act,1969, excluding poultry sector; raw materials, components, etc, for local industry (25 sectors), e.g, artificial leather industry, pesticide industry, sugar mills, fan industry, flat rolling steel industry, electric motors, on import of which concession in customs duty is allowed under SRO 565(l)/2006 dated 5.6.2006.
A one percent additional duty would not be applicable on the import of fertilizers; import of seeds and spores for sowing; import of Plant & Machinery for manufacturing of goods; import of used vehicles under SRO 577(1)/2005, dated 6th June, 2005; import of goods on which regulatory duty is already levied under SRO 568(l)/2014 dated 26.6.2014 and imports of telecom sector.
Sharing details of enhanced rates of duties and taxes on old and used vehicles, Dar stated that the prices of locally manufactured vehicles would not increase because the government has not raised FED on the locally produced vehicles. There is no change in the fixed duty structure on the import of old and used cars up to 800cc and no change in taxes on import of vehicles up to 1000cc.
The fixed duty rate for all higher capacity cars in category of old and used has been increased by 10 percent as the duty rate for 1001cc to 1300cc was raised from $12000 to $13200, 1301cc to 1500cc from $16980 to $18590, 1501cc to 1600cc from $20500 to $22550 and 1601cc to 1800cc from $25400 to $27940 with immediate effect.
The old and used vehicles above 1800cc would now be subjected to a 10 percent regulatory duty, he maintained. The rate of FED on locally manufactured cigarettes has also been increased on both the higher lower duty slabs. In case of higher slab, the enhanced rate of duty would be Rs 3155 per thousand cigarettes where locally produced cigarettes if their on-pack printed retail price exceeds Rs 3350 per thousand cigarettes (PCT heading, 24.02). The previous rate of FED was Rs 3030.
Under the lower slab, the increased rate of duty would be Rs 1420 per thousand cigarettes with regard to locally-produced cigarettes if their on-pack printed retail price does not exceed Rs 3350 per thousand cigarettes (PCT heading, 24.02). The previous rate of duty was Rs 1320.
To a query, he said the government is in the process of challenging the decision of the Lahore High Court against the Super Tax. High Court has granted stay order against the levy of Super Tax. Banks have paid the tax but some units like cement units have challenged the levy. About the reversal of tariff reforms due to imposition of additional duties, Dar responded that tariff reforms have not been revered.
About revenue collection position, Dar said that a 22 percent growth in revenue collection has been witnessed in November 2015 when compared with previous fiscal. In October 2015, the FBR has witnessed a 22.4 percent increase as compared to October last year. The government will not revise downward the assigned revenue collection target of Rs 3103.7 billion during 2015-16.
On a proposal from the Federal Board of Revenue the ECC approved extension in time period for 0.3% reduced rate of advance income tax(WHT) on non-filers up to 31 December 2015. The ECC also approved the proposal of Federal Board of Revenue for grant of exemption of duties and taxes for the equipment to be installed at IC3 facility at Port Qasim.
The exemption was granted in pursuance of a bilateral agreement. The installation of the equipment would benefit Pakistani exports as it provided a single step clearance for all US bound export cargo using scanners with sophisticated technology.