Discover the FY25 Budget Proposals which encompass a range of measures aimed at enhancing government revenue and promoting tax compliance. While adjustments in advance taxes on vehicle purchases may impact sales negatively, they are expected to bolster government income. Tax increases across sectors like banking and the economy seek to diversify revenue streams, albeit with potential hindrances to growth. Real estate reforms target increased tax revenue and discourage unproductive investments, while steel sector reforms aim to simplify compliance procedures, offering positive prospects for the industry.
The FY25 Budget Proposals:
| Category | Proposal | Impact | Comment |
|---|---|---|---|
| Autos | Advance tax on (purchase/transfer) of goods and passenger transport vehicles to be collected at the rate of 10% (at least) of the vehicle’s value. | Negative | Introducing a 10% advance tax on vehicle transfers may dampen auto sales but could bolster government revenue. |
| Autos | Increase the annual advance tax for vehicles of 2000cc and above to Rs. 500,000 for non-filers and raise the advance tax on their purchase to 24%. | Negative | Abolishment of Advance tax on foreign payments by filers through credit cards |
| Banking | Increase in Advance tax on foreign payment by non-filers through credit cards to 20% | Positive | While it discourages foreign spending by non-filers, it also broadens the tax base and increases government revenue. |
| Banking | Tax on Agriculture Income, Non-Corporate Businesses, Service Providers, Builders and Construction Association | Negative | Encourages the outflow of foreign exchange through international spending |
| Economy | Raise WHT on cash withdrawal from banks by non-filers from 0.6% to 0.9% | Positive | Enhance government revenue, encourage tax compliance, and reduce cash transactions |
| Economy | Increase in Advance Income tax on electricity bills issued to non-filers/unregistered industrial and commercial connections to 30% | Positive | Can diversify revenue and increase fiscal capacity. |
| Economy | Increase in Advance Income tax on electricity bills, exceeding Rs. 200,000 monthly, issued to non-filers domestic connection to 20% | Negative | Burdens industries with higher operational costs, reducing profitability and hindering growth. |
| Economy | Increase in Extra Sales tax on retail and marriage halls to 25% (if the bill exceeds Rs. 100,000) and 30% (if bill exceeds Rs. 200,000) | Positive | Encourages tax filing among individuals and boosts government revenues. |
| Economy | Increase in Extra Sales tax on retail and marriage halls to 25% (if the bill exceeds Rs. 100,000) and 30% (if the bill exceeds Rs. 200,000) | Neutral | Marginally affects the cost of importing machinery |
| Economy | Advance income tax on gas bills issued to non-filer Industrial/Commercial connection holders of 20% | Negative | Burdens industries with higher operational costs, reducing profitability and hindering growth. |
| Economy | Advance income tax on Int business class tickets instead of FED (75K-250K based on routes) | Positive | Discourages the outflow of foreign exchange through international spending |
| Economy | 18% GST on petrol and diesel | Negative | Exemption from CGT on the sale of immovable property is held for 4-6 years, but only for those who have declared the property upon acquisition. |
| Import oriented sectors | Increase advance income tax on the import of machinery by 1% | Neutral | Could adversely affect import-oriented sectors by increasing production costs and reducing competitiveness. This may lead to a decrease in pharmaceutical sales due to higher prices. |
| Import oriented sectors | Increase advance income tax on the import of raw materials by industrial undertakings by 0.5% and commercial importers by 1% | Negative | This may result in a decline in sale volumes and an increase in inflation, creating a tough second-round impact |
| Pharmaceuticals | General Sales Tax of 10-18% on Medicines | Negative | |
| Real Estate | WHT of 0.5% on immovable property (including agricultural land) on value evaluated by the FBR. | Positive | May help the government in increasing tax revenues along with discouraging investment in unproductive sectors |
| Real Estate | Increase in Advance tax on sales of immovable property above 450 sq yards in Urban Areas by non-filers to 10.5% | Negative | May negatively impact government revenue |
| Real Estate | Increase in Advance tax on sales of immovable property above 450 sq yards in Urban Areas by non filers to 10.5% | Positive | May help government in increasing tax revenues along with discouraging investment in unproductive sectors |
| Steel | Abolish the 4% further tax on sales to non-registered persons and the CNIC requirement for selling to unregistered persons. | Positive | Simplify compliance procedures, impacting steel companies positively |
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