Amid name-calling and uproar from the opposition benches in the Parliament on Wednesday evening, Minister of State for Finance Asad Umar presented the second supplementary budget – or mini budget 2019 – since PTI came into power four months ago.
The Finance Supplementary (Second Amendment) Bill, 2019 in Umar’s own words should not be seen as a mini budget but as an investment package that would help to bolster Pakistan’s exports and help revive its industries.
Here are a few highlights from Umar’s budget speech in the Parliament that every Pakistani should be aware of.
Good News for Small Business Owners
Small business owners including shopkeepers and those operating marriage halls will receive a relief in the form of tax reduction.
Importers of raw materials that go into the production of such items as diapers, tanning, leather, footwear, plastic and home appliances will also benefit from reduced duty rates or the removal of regulatory duty.
Bad News for the Rich & Their Imported Luxury Vehicles
Lovers of expensive, luxury cars were in for a rude awakening when Umar announced an increase of duty on the import of luxury cars and jeeps. The increase would be 5 – 10% for vehicles above 1800cc, 20 – 25% for vehicles that are up to 3,000cc and 25 – 30% for those above 3,000cc.
Also, a 10% excise duty has been slapped on the import of the engines of cars and jeeps above 1800cc.
Reduced Cost of Industrial Operations
Two major steps were proposed by Asad Umar to reduce the cost of running a business and thereby, encouraging the business owners to reduce the cost of their finished products.
The first proposal involved the reduction of Gas Infrastructure Development Cess (GIDC) across all industries.
The second point spoke about an overall 50% reduction in these rates for the fertilizer sector. Umar believed that such a relief would help bring down the fertilizer cost by Rs. 200 per bag.
The Tax Commissioner to Become More Powerful
Once the Finance Supplementary (Second Amendment) Bill, 2019 is passed, the Tax Commissioner’s ambit of powers will see an enhancement.
A proposed amendment to section 123 of the income tax ordinance reads:
“[W]here an offshore asset of any person, not declared earlier, is discovered by the Commissioner…the Commissioner may at any time before issuing any assessment order…issue to the person a provisional assessment order…for the last completed tax year of the person taking into account the offshore asset discovered.”
According to Minister of State for Revenue Hammad Azhar, the insertion means that the tax authorities will have powers to go after the owners of undeclared assets as soon as information is received about them.
This is not an amnesty clause, infact its the opposite. It ENHANCES powers of FBR for provisional assessment of tax evasion in Offshore assets cases. The liability of money laundering is covered by a separate law and is ofcourse intact. https://t.co/uV7aPkIN7S
— Hammad Azhar (@Hammad_Azhar) January 23, 2019
Significant Tax Cuts for the Business Sector
Both large and small businesses belonging to low-cost housing, banking, agriculture and trading are likely to benefit significantly from mini budget 2019.
The earning of banks resulting from Small and Medium Enterprises (SMEs) will experience a tax cut from 35% to 20%.
Similarly, seed money amounting to Rs. 5 billion will be offered as interest-free loans to companies working in the low-cost housing sector.
On the whole, mini budget 2019 seems much more people friendly than its predecessor and is likely to help create more jobs and stabilize the economy.
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