Tag: gst

  • 18% GST on formula milk, baby food slammed

    18% GST on formula milk, baby food slammed

    An inflation bomb has been dropped on the Pakistani public as the government, in its new 2024-25 budget, imposed an 18 percent General Sales Tax (GST) on baby food and formula milk – a necessity for the nourishment of children.

    People have strongly criticised the new tax on its probable risk of worsening malnutrition among infants and children since parents wouldn’t be able to afford baby food.

    “In other countries, governments reduce taxes on such products,” said Akmal, a resident of Lahore, to DAWN.

    In his budget speech Finance Minister Muhammad Aurangzeb ironically underscored the importance of children’s nutrition in the country.

    When asked about the new tax, he replied that it “was not a big deal” as formula milk is purchased by the middle and upper middle classes who can afford it.

  • IMF wants Pakistan to increase petrol prices

    IMF wants Pakistan to increase petrol prices

    The International Monetary Fund (IMF) conveyed to the Pakistani authorities that while the Petroleum Development Levy (PDL) has considerably increased in recent years, the taxation of petroleum products has declined since 2019. “The relatively low rate of taxation of petrol is also reflected in the sale price relative to other countries.” The IMF emphasized that there is a difference of gasoline prices when compared to selected neighboring countries and emerging economies.

    The average 2023 price of gasoline at the pump was $1.12 per litre against $0.97 per litre in Pakistan. The IMF report said that taking off the exemption of petroleum products under the Sales Tax would increase prices by 18% with the standard rate of General Sales Tax.
    Moreover, the IMF has also recommended in its Technical Assistance Report with the Pakistani authorities to raise taxes on domestically manufactured automobiles and on luxury goods such as yachts. It also said to increase border control to stop smuggling of oil derivatives.

    Pakistan faces a problem of smuggling especially on it Western borders with both Iran and Afghanistan. A 2023 Civil Intelligence Agency report exposed that Pakistan faced loss of more than Rs. 60 billion annually due to smuggling of more than 2.81 billion litres of oil from Iran to Pakistan, as per the report of Business Recorder.

    The Fund also recommended the Federal Board of Revenue (FBR) to tax e-cigarettes equal to tobacco in the country.

  • Govt to maintain 18% GST rate in upcoming budget 2023-24

    Govt to maintain 18% GST rate in upcoming budget 2023-24

    In the forthcoming budget for 2023-24, it is anticipated that the government will maintain the current standard rate of General Sales Tax (GST) at 18 per cent. Additionally, efforts are being made by the government to increase the rates of withholding taxes, where applicable, with the aim of augmenting tax revenues.

    Another aspect being considered is the implementation of amendments for retailers, with the objective of including a larger number of businesses within the tax bracket. It is worth noting that previous schemes designed to entice retailers into the tax system have proved unsuccessful over the past few decades.

    According to The News, various proposals are currently being deliberated upon for the imposition of Minimum Asset Tax (MAT) on both movable and immovable assets. However, the Federal Board of Revenue (FBR) has been advised to seek constitutional validation for these proposed taxation measures in order to avoid potential legal disputes.

    Moreover, the government is exploring options to enhance documentation within the property sector, as part of its ambitious goal to achieve a tax collection target ranging between Rs9 and Rs9.2 trillion for the upcoming budget.

    These proposals were thoroughly discussed in a meeting chaired by Finance Minister Senator Ishaq Dar, which focused on budgetary considerations within the Finance Division. Present at the meeting were State Minister for Finance Dr Ayesha Ghous Pasha, Special Assistant to the Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Chairman of the Reforms and Resource Mobilization Commission (RRMC) Ashfaq Yousuf Tola, the finance secretary, FBR chairman, and other senior officials from the Finance Division and FBR.

    During the meeting, FBR Chairman Asim Ahmad provided a comprehensive presentation on the budgetary proposals for the Federal Budget 2023-24.

  • IMF likely to announce staff level agreement with Pakistan by this week

    IMF likely to announce staff level agreement with Pakistan by this week

    According to Syed Naveed Qamar, the Federal Minister for Commerce, Pakistan has taken all necessary measures to unfreeze a $6.5 billion credit line and is expected to reach a staff level agreement (SLA) on Extended Fund Facility (EFF) with the International Monetary Fund (IMF) this week.

    Dr Aisha Ghaus Pasha, the Minister of State for Finance, stated that Pakistan and the IMF are close to reaching an SLA, but that basic structural reforms are necessary regardless of whether they are part of the IMF program or not.

    After the formal announcement, Pakistan will receive a $1.2 billion tranche under the EFF. Qamar stated that the agreement would give investors and creditors confidence in Pakistan’s stabilising economy and that their money would remain protected.

    Qamar emphasized that the IMF program is the beginning of other funds flowing in and that increased imports would benefit exports.

    However, Pakistan is struggling to meet the tough conditions set by the IMF, such as increasing its low tax base, ending exemptions for the export sector, and raising artificially low energy prices. The country is in dire need of funds as the State Bank of Pakistan-held foreign exchange reserves only cover one month of imports.

    To meet IMF conditions, Pakistan has raised taxes, cut subsidies, and devalued its currency. Additionally, a supplementary finance bill was approved that increases sales tax from 17 per cent to 25 per cent on imports and raises general sales tax from 17 per cent to 18 per cent, increasing the burden on already inflation-stricken people.

  • From soap to air tickets: What’s getting costlier after mini-budget?

    From soap to air tickets: What’s getting costlier after mini-budget?

    The Federal Board of Revenue (FBR) has issued an SRO to increase the standard 17 per cent general sales tax (GST) to 18 per cent, which will collect taxes worth Rs115 billion. The remaining Rs55 billion will be generated through other measures mentioned in the Finance (Supplementary) Bill 2023.

    The top tax collection authority stated in the notification that the 18 per cent GST would be applicable to consumer packaged goods, which include various items used in everyday life.

    Following the increase in GST, the following items will experience a hike in their prices:

    • Biscuits
    • Jam
    • Jelly
    • Noodles
    • Edible oil
    • Coffee
    • Chocolates
    • Make-up
    • Shampoos
    • Creams
    • Lotion
    • Soap
    • Toothpaste
    • Hair colour
    • Hair removal cream
    • Hair gel
    • Shaving foam
    • Shaving gel
    • Shaving cream
    • Shaving blades
    • Computers
    • Laptops
    • Electronic gadgets
    • Smartphones
    • iPods
    • TVs
    • LEDs
    • LCDs
    • Juicers
    • Blenders
    • Other electronic machinery
    • Car shampoos
    • Car polishes
    • Perfumes
    • Children’s toys

    In addition to the aforementioned actions, the government intends to raise the Goods and Services Tax (GST) on luxury items from 17 per cent to 25 per cent. The Federal Excise Duty (FED) on first and business class air tickets will be increased to either Rs20,000 or 50 per cent, whichever amount is higher.

    Marriage halls will be subject to a ten percent withholding adjustable advance income tax, and the FED on soft drinks, sugary drinks, and cement will also be increased.

  • Imported mobiles priced above $500 to become more expensive under proposed GST of 25%

    Imported mobiles priced above $500 to become more expensive under proposed GST of 25%

    The Federal Board of Revenue (FBR) has put forward a proposal to significantly augment the sales tax on imported mobile phones.

    This proposal is part of the Finance (Supplementary) Bill, 2023, which incorporates amendments to the Ninth Schedule of the Sales Tax Act 1990, specifically focusing on mobile phones.

    As per the proposed bill, a sales tax of 25 per cent would be applicable on premium mobile phones that are imported and have a value of more than Rs132,000 ($500).

    The proposed amendment entails an increase in sales tax from 17 per cent to 18 per cent for imported mobile phones with an import value ranging from Rs53,000 ($200) to Rs132,000 ($500).

    It is noteworthy that this range includes two distinct categories within the Ninth Schedule, namely $200-$350 and $350-$500.

    It has been announced that the sales tax rate for imported mobile phones with a value up to $200 will remain unchanged. No proposed changes have been put forward for this import value category.

  • Petrol price likely to rise by Rs20 per litre in upcoming review

    Petrol price likely to rise by Rs20 per litre in upcoming review

    Oil industry sources report that there may be a Rs20 per litre increase in petrol prices at the upcoming review on February 15, 2023. The increase is based on calculations of the international price of petrol, specifically on a free on board (FOB) basis.

    During the previous fortnightly review of fuel prices, the government implemented a substantial increase of Rs35 per litre. Currently, the government imposes a petroleum levy (PL) of Rs50 per litre, while the general sales tax (GST) has not yet been levied.

    Sources suggest that the price of petrol could increase further if the foreign exchange rate is adjusted at the next review. They noted that the exchange rate is currently unfavorable, negating any potential benefits or reductions for local consumers.

    Despite a decrease in international petrol prices, the sharp depreciation of the rupee against the dollar has offset gains, adversely affecting domestic consumers. Additionally, the sources warned that the government may implement a Rs20 per litre adjustment to account for the exchange rate, which could result in an overall increase of up to Rs40 per litre.

    The price of diesel, as reported by sources, has not seen any increase on FOB without exchange rate adjustments. However, they stated that diesel prices could potentially increase in the next review if the exchange rate is adjusted. The government previously adjusted Rs14 per litre on diesel due to the exchange rate, but the recent appreciation of the dollar has effectively negated this adjustment from the last review.

    While global diesel prices have reportedly decreased by five to six dollars per barrel, the depreciation of the rupee prevents the government from passing on the reduction to local consumers.

    The most recent price adjustment of petroleum products was made on January 29, 2021, by the federal government. Following the review, petrol was priced at Rs249.80 per litre, high-speed diesel at Rs262.80 per litre, kerosene oil at Rs189.83 per litre, and light-speed diesel at Rs187 per litre.

    The government implemented an increase in petrol and high-speed diesel prices by Rs35 per litre each, and raised the rates of kerosene oil and light diesel oil by Rs18 per litre each on January 29, 2023.

    Pakistan is currently experiencing a shortage of petrol, with its most populous province, Punjab, being hit the hardest. The crisis has affected major and minor cities, towns, and villages in Punjab, with the shortage being attributed to petroleum dealers.

    Sources previously reported that in addition to a low import of petrol by most Oil Marketing Companies (OMCs), petroleum dealers were also involved in hoarding petrol in anticipation of an expected price increase in mid-February.