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HomeEconomyFEDERAL BUDGET FY25 UNVEILS HIGHER TAX RATES FOR LATE FILERS AND NON-FILERS

FEDERAL BUDGET FY25 UNVEILS HIGHER TAX RATES FOR LATE FILERS AND NON-FILERS

Key Targets and Allocations for Federal Budget FY25

No Change in Exempt Maximum Annual Income Threshold
– Koi Tabdeeli Nahi PKR 600,000 Annual Income Threshold mein, jis par koi tax nahi lagta.

Higher Tax Rates for Late Filing
– Late Filers ke liye naya tax rate introduce ho raha hai. Yeh woh log hain jo sirf kisi khas transaction ke liye filers bante hain taake non-filers ke higher rates se bach saken. Aise late filers ke liye ek naya tax rate rakha gaya hai jo filers se zyada magar non-filers se kam hai.

Income Tax on Immovable Properties
– Jaidad ki khareed-o-farokht par progressive tax rates categorize ki gayi hain:
– Filers: i) PKR 50Mn tak ki property par 3%; ii) PKR 50Mn se zyada aur PKR 100Mn tak ki property par 3.5%; iii) PKR 100Mn se zyada ki property par 4%.
– Late-Filers: Inka rate zyada hai, yani 6%, 7% aur 8% mukhtalif brackets ke liye.
– Non-Filers: i) PKR 50Mn tak ki property par 12%; ii) PKR 50Mn se zyada aur PKR 100Mn tak ki property par 16%; iii) PKR 100Mn se zyada ki property par 20%.

Capital Gains Tax on Disposal of Immovable Properties
– Holding period ke basis par current regime ko replace karke flat 15% rate filers ke liye aur 45% non-filers ke liye regardless of holding period rakha gaya hai, agar property 1 July 2024 ke baad acquire ki gayi hai.

Progressive Advance Income Tax on Immovable Properties
– Progressive advance tax on sale of immovable properties to be deducted at source as follows:
– Filers: i) PKR 50Mn tak ki property par 3%; ii) PKR 50Mn se zyada aur PKR 100Mn tak ki property par 4%; iii) PKR 100Mn se zyada ki property par 5%.
– Late-Filers: 6%, 7%, aur 8% mukhtalif brackets ke liye.
– Non-Filers: 10% of the value of property.

Capital Gains Tax on Disposal of Securities and Income from Mutual Funds and CIS
– Holding period ke basis par capital gains tax ko flat 15% rate filers ke liye aur 45% non-filers ke liye replace kiya gaya hai, agar securities 1 July 2024 ke baad acquire ki gayi hain.
– Mutual funds aur collective investment schemes se milne wale capital gains income ko bhi 10% se 15% kiya gaya hai.

Dividend Income from Mutual Funds
– Profit on debt aur mutual funds se milne wale dividend income ke darmiyan arbitrage ko reduce karne ke liye, dividend rate ko 15% se 25% kiya gaya hai, agar mutual fund ki income ka 50% ya us se zyada profit on debt se ho.

Export Income Converted to Normal Tax
– Export income par 1% tax jo pehle final tax tha, ab minimum income ke tor par treat kiya jayega.

Reduced Rate Certificate in Lieu of Exemption Certificate
– Reduced rate of tax ko charge kiya jayega, agar pehle exemption allowed tha exemption certificate show karne par.

Increase in WHT on Profit on Debt for Non-Filers
– Non-filers ke liye profit on debt par advance tax rate 30% se barhakar 35% kiya gaya hai taake non-compliance ka cost barh sake.

Broadening of Scope of WHT for Dealers, Distributors, Wholesalers
– Filhal, kuch specified sectors ke dealers, distributors, wholesalers aur retailers se advance tax collect kiya jata hai. Ab propose kiya gaya hai ke yeh tax economy ke tamam sectors se collect kiya jaye taake puri supply chain document ho sake. Non-filers ke liye dealers, distributors, wholesalers ke rate ko 0.2% se 2% aur retailers ke liye 1% se 2.5% kiya gaya hai taake traders ko document aur non-filing ko discourage kiya ja sake.

Notification of Minimum Value for Income Tax at Import Stage
– Import stage par income tax ko effectively collect karne aur under-declaration ko check karne ke liye Board ko empower kiya gaya hai ke minimum value notify kar sake.

Higher WHT on Registration of Vehicles
– Motor vehicles ke liye tax collection ka basis engine capacity se value percentage par badalne aur 2000cc se zyada engine capacity wale vehicles ke liye tax collection percentage increase karne ka proposal diya gaya hai.

Exemption of Income from Subsidy
– Subsidies se receipts ko exempt karne ka exemption withdraw karne ka proposal diya gaya hai taake horizontal equity principle maintain ho sake.

Increase in Reduced Rate of 1% on Supply of Cigarettes by Distributors
– Cigarettes supply by distributors par reduced rate ko 1% se barhakar 2.5% karne ka proposal diya gaya hai.

Advertisement Expense for Brand to Non-Resident Associate
– Locally incorporated subsidiary ka 25% total advertisement expense non-resident associate ke sath share karne ka proposal diya gaya hai jo Pakistan se royalty payment receive karta hai.

Increase in Rate of Default Surcharge Due to Late Payment
– Filhal default surcharge rate 12% per annum hai jo interbank rate se significantly kam hai. Recovery of tax arrears mein yeh low rate hindrance hai. Is liye propose kiya gaya hai ke default surcharge rate ko KIBOR rate plus 3% per annum kiya jaye.

Exemption to Erstwhile FATA/PATA Regions
– Income aur withholding taxes se exemption ko ek aur saal tak extend karne ka proposal diya gaya hai yani 30 June 2025 tak.

Measures Related to Agriculture Sector
– PKR 5Bn allocate kiye gaye hain Mark-up aur Risk Sharing Scheme for Farm Mechanization ke liye taake credit availability ho tractors, planters, threshers, harvesters aur mobile grain dryers khareedne ke liye. (Positive for Fertilizer aur Tractor Manufacturers)

Measures Related to IT Sector (Positive for IT)
– PKR 79Bn allocate kiye gaye hain IT sector aur IT related human capital development ke liye.
– PKR 8Bn allocate kiye gaye hain IT park Karachi mein establish karne ke liye.
– PKR 11Bn allocate kiye gaye hain IT park Islamabad mein establish karne ke liye.
– PKR 2Bn allocate kiye gaye hain Pakistan Software Export Board ke liye.

Measures Related to Foreign Remittance
– PKR 86.9Bn allocate kiye gaye hain overseas Pakistanis se remittances ki growth ke liye. Yeh TT charges ki reimbursement aur schemes jaise Sohni Dharti etc. fund karne ke liye use kiye jayenge.

Measures to Facilitate Growth in Exports
– Export Refinance Scheme ka allocation via EXIM Bank PKR 3.8Bn se barhakar PKR 13.8Bn kiya gaya hai.
– SBP 539Bn ke export credit provide karega, jismein 20% SME sector ke liye allocate kiya gaya hai.
– FY25 ke liye SME sector ko credit allocation mein PKR 100Bn ka izafa kiya gaya hai.
– DLTL claims ko settle karne ki process ko expedite karne ka proposal diya gaya hai.

Relief Measures
– Iron aur steel scrap ko sales tax se exempt kar diya gaya hai. (Positive for Steel)
– Sales tax exemption ka phased-withdrawal erstwhile FATA/PATA regions ke liye. (Neutral for Steel)
– Petroleum products ki zero-rating ko exemption mein convert kiya gaya hai. (Positive for Oil & Gas)

Revenue Measures
– Mukhtalif exemptions aur zero-rating aur reduced/fixed rates ko withdraw kiya gaya hai.
– Mobile phones jo USD 500 se zyada value ke hain, unpar 25% existing rate remain karega, magar baqi mobile phones par 18% GST lagaya gaya hai.
– POS retailers jo leather aur textile products deal karte hain, unpar sales tax rate ko 15% se barhakar 18% kiya gaya hai. (Negative for Textile aur Leather)
– Lead, coal, scrap of paper aur plastic, silica ke liye regime. (Negative for Manufacturing sector)

Other Measures
– Third Schedule ke goods ke minimum price ko fix karne ke liye Board ko empower kiya gaya hai.
– Tax fraud se related provisions ko streamline aur strengthen karne ka proposal diya gaya hai.
– Default surcharge rate ko SBP’s policy rate KIBOR plus 3% ke sath align karne ka proposal diya gaya hai.

Relief Measures
– Hemodialyzers ke liye fluids aur powders ki raw materials par ACD exemption. (Positive for Pharmaceutical)
– Fish/Shrimp aur Seafood farming aur processing ke liye machinery aur equipment import par exemptions ka extension. (Positive for Fishing sector)

Revenue Measures
– Mukhtalif items par RD (Regulatory Duty) impose/increase kiya gaya hai taake domestic manufacturing promote ho. (Positive for Manufacturing)
– New aur used vehicles ke import par RD rationalize kiya gaya hai. (Positive for Automobile)
– Localized auto parts ke liye additional customs duty impose ki gayi hai taake local manufacturing sector incentivize ho. (Positive for Automobile Parts)
– Iron aur non-alloy steel ke flat rolled products par RD increase/levy ki gayi hai.
– Food Confectionary ke ground nuts aur margarine import par RD exemption withdraw ki gayi hai. (Negative for FMCG)
– Ground nuts aur margarine import par RD exemption withdraw ki gayi hai jo Paints aur PVC use karte hain. (Negative for Paints, PVC)
– Silver cans aur lollipop sticks par RD exemption withdraw ki gayi hai.
– Home Appliances ke inputs ke import par duties exemption review ki gayi hai. (Negative for PAEL, WAVES)
– Hybrid Vehicles ke import par duties concessions withdraw ki gayi hain. Electric vehicles jo USD 50,000 se zyada value ke hain unpar duties concessions kam ki gayi hain. (Negative for CBU imports)
– Aerosol Products ke containers ke import par customs duty increase ki gayi hai. (Negative for Paints aur Chemical)

Other Measures
– Bovine lipid extract surfactant par customs duties exemption.
– Solar Panels aur Allied Equipment ki manufacturing ke liye incentives.
– Submersible pumps ke parts import par customs duty rationalize ki gayi hai.
– Wheat, Sugar, HSD aur LNG ke import par customs duties rationalize ki gayi hain.
– Fresh aur dry fruits ke import par customs duties exemption withdraw ki gayi hain.
– Cement par FED PKR 2/Kg se barhakar PKR 3/Kg kiya gaya hai. (Negative for Cement)
– Acetate tow par PKR 44,000 FED impose ki gayi hai. (Negative for Tobacco)
– Nicotine pouches par PKR 1,200 per kg FED impose ki gayi hai. E-liquids par bhi FED enhance kiya gaya hai.
– Sugar manufacturers ko supply hone wale sugar par PKR 15 per kg FED impose ki gayi hai. (Negative for Food aur Sugar)
– Commercial properties aur first sale of residential properties par 5% FED impose kiya gaya hai. (Negative for Real-Estate)
– Filter rod par FED rate PKR 1,500 per kg se barhakar PKR 80,000 per kg kiya gaya hai. (Negative for Tobacco)
– Local manufactured cigarettes ke price threshold ko PKR 9,000 se barhakar PKR 12,500 kiya gaya hai.

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