ISLAMABAD: Finance Minister Shaukat Tarin has defended the “budget of hope” presented for the FY21-22 and also announced adjusted revenue measures and spending plans in concluding National Assembly (NA) session.
Responding to the recommendations made by the senators and Opposition, the finance minister announced that there would be no tax on internet usage and SMS, while 75 paisa would be collected in tax for every mobile phone call exceeding the duration of five minutes.
However, he said, visually-impaired mobile phone users would be exempted from taxes on handsets. Tarin announced these changes to proposals in the Finance Bill 2021-22 during a National Assembly (NA) session.
Tarin also announced the reduction and withdrawal of other taxes. He said the tax on milk had been removed, while 17 percent tax on gold and silver was being reduced to one percent and three percent, respectively. However, 17 percent tax would remain in place for the value addition of the metals.
“Meanwhile, the tax on poultry products and cattle feed was being reduced from 17 percent to 10 percent, and the tax on textile products for retailers had been decreased from 12 percent to 10 percent,” he added.
“We have also withdrawn the withholding tax,” he said, adding that under a new auto policy, taxes would be reduced for cars up to 1,000cc. Initially, the government had announced that taxes would be reduced for cars only up to 800cc.
Tarin said taxes on the medical bills and provident funds of government employees had been withdrawn as well. He further announced that taxes initially imposed on IT and e-commerce platforms had been withdrawn.
He said that the income tax, which was increased to 35 percent under the construction package, had been reduced to 20 percent.
Referring to the power sector, the finance minister said Pakistan was facing major structural issues in the power sector as the government had to pay Rs900 billion on account of capacity payments for electricity that was not even being utilised.
Tarin said there were three solutions to the issue — either to let the circular debt increase, increase the budget allocation to address the problem or simply increase the electricity tariff.
“However, the prime minister was resolute that there would be no increase in the tariff and the International Monetary Fund had also been informed of the decision”, said Tarin, adding that the government was employing “out-of-the-box” ways to address the issue.
