Finance Minister Asad Umar announced a second mini-budget in the first five months of the Pakistan Tehreek-e-Insaf (PTI) government on Wednesday, abolishing critical taxes on capital market and increasing duties on luxury cars.
Finance Minister Asad Umar delivered his second budget speech in the National Assembly amid exchange of name calling and taunts with opposition parties — unlike delivery of previous supplementary budget speech in September last year in a calm and peaceful environment.
He said that the government had decided to reduce tax from the existing 39 to 20 per cent on bank income for loans to specific sectors, including SMEs, agriculture, and housing schemes. He also announced an allocation of Rs. 5 billion for Qarz-e-Hasna for low-cost housing.
The minister also said that the government decided to abolish tax on non-filers. Now non-filers can buy 1300 cc car and a house worth of Rs. 5 million by paying higher tax.
He also said that there was a proposal of merging different slabs of taxes and duties on mobile phones.
The Finance Ministry’s spokesman Dr.KhaqanNajeeb said that, “there is no change in Federal Board of Revenue(FBR) target and in overall fiscal deficit” during the year. The FBR’s target remained unchanged at Rs. 4.398 trillion, he added.
Another official said the government would lose some revenue on account of removal of withholding tax on banking transactions for tax filers and stock exchange trading, but this would be more than compensated by an end to the ban on purchase of vehicles of up to 1300cc capacity by non-filers and increase in duties on luxury cars and other items.
Duties on import of cars and jeeps above 1800cc would increase by 5-10 per cent — from 20%to 25% for up to 3000cc and from 25% to 30%for above 3000cc. Also, 10% excise duty has been imposed on import of cars and jeep engines exceeding 1800cc to discourage luxury imports.
After coming into power, Imran Khan’s government presented a‘mini-budget’, which was essentially a bill that raised income tax rates,imposed additional indirect taxes in the shape of higher custom duties. The government also wanted to make it easier for non-taxpayers to buy cars and homes but after objections by opposition leaders, especially Mian Shehbaz Sharif, and criticism from the media, PTI backed down from that step.