Govt announces fix tax scheme for retailers

The Shahbaz Sharif led government has announced a fixed tax scheme up to Rs10,000 for small retailers.

While winding up the debate on next year’s budget in the National Assembly on Friday, the federal minister said that small retailers will have to pay Rs3,000 per month and large retailers Rs10,000, after which they will not be questioned further.

There are about 900,000 retail shops in Pakistan and the government wants to bring up to 300,000 of these shops into the tax net.

He said that a new scheme has been introduced for this purpose under which the income tax and sales tax to be paid by these shops would be linked to their electricity bills.

The finance minister said that small retailers will have to pay Rs3,000 per month and large retailers Rs10,000, after which they will not be questioned further.

Retailers who are trading in gold and whose shops are 300 square feet or less, will have to pay a fixed income and sales tax of Rs40,000 and sales tax for big stores will be 17%.

Miftah Ismail said that withholding tax on gold sold to goldsmiths by common people has been reduced from 4% to 1%.

He also announced that a similar fixed tax scheme would be announced for real estate, builders and car dealers.

Moving on to the details of other taxes, the government has identified 13 sectors which have made significant profits this year and we have decided that the companies whose revenue is more than Rs300 million should pay 10% super tax for one year.

The sectors including cement, steel, sugar, oil and gas, fertilizer, LNG terminals, textiles, banking, automobile assembly, cigarettes, beverages, chemicals and airlines would have to pay the tax.

He further said that an additional tax of 1% will be levied on those individuals and entities whose annual income is more than Rs150 million. Similarly, he said that those earning more than Rs200 million would pay 2% additional tax,3% for more than Rs250 million and those earning more than Rs300 million would be taxed at 4%.

He further said that this tax will be collected once in the financial year 2022.

The Finance Minister said that my companies will also pay Rs200 million more tax than before and therefore if we are asking to pay more tax than others, then we are also contributing.

He said that the existing entities in other sectors would have to pay this one-time additional tax which is 4% of their income.

He further said that this tax is not on their expenses but on their income and that is why it will not increase inflation but will increase our income.

He also said that the government had promised the IMF that the basic deficit of Rs1,600 billion would not only be reduced but also a surplus of Rs153 billion would be given during the next fiscal year.

While winding up the discussion, Miftah said that the country is no longer on the path of default as it was on the path of development.

He also accused the PTI government of bringing the country to the brink of bankruptcy and said that we have saved the country from default.

He said today I want to give good news to the nation that the country is not on the path of default but on the path of development.

He termed the budget as farmer-friendly and announced that the sales tax on cotton cakes has been abolished. “I don’t think there has been a more farmer-friendly budget in the last 10 to 20 years that reflects the values of the current coalition government,” he said.

The Minister said that as a result of this farmer-friendly budget, the country would become self-sufficient in the production of edible oil, wheat and other commodities, and these benefits would be long-term.

“Funds for farmers in the budget should be considered an investment, not a subsidy. We are confident that if we invest in farmers, they will give us the best returns,” he said.

The Federal Minister said that the current financial year would be considered a bad year in the history of Pakistan as we missed many targets and recorded a significant deficit in the budget.

“The federal government has projected a deficit of 8.95 per cent of the old GDP, which shows a huge gap between the country’s expenditure and resources. Now we have to borrow from others, which is why I had to go on several foreign tours.

What kind of freedom is it when we borrow Rs20,000 billion in three to four years, he questioned.

Accusing the former prime minister and PTI chief Imran Khan of taking such huge loans in a short span of time, Miftah Ismail said that in doing so, we are moving towards slavery and not towards freedom.

Referring to Imran Khan, he said that you should not give this lecture to the people that we are moving towards real freedom.

He also criticized Imran for giving fuel and energy subsidies in February.

He said the subsidies were worth Rs120 billion and thanked the PML-N allies who acknowledged that the government could not afford such a difficult time.

He said that ending the subsidy was a difficult decision and again thanked the allies saying that they all thought that it would affect the political capital but they all agreed that Pakistan was the first priority.

Miftah estimates that the current account deficit will reach about $17 billion in the current financial year, and that modest reserves of $10 million cannot sustain this deficit.

He explained that this is why the IMF $6 billion loan program should be restarted to save the country from default.

Elaborating on the recent talks between the IMF and the government, he said that Pakistan has made significant progress in 23 financial numbers.

Referring to the taxes announced by Prime Minister Shahbaz Sharif yesterday, Miftah Ismail told the House that no indirect tax has been levied and no tax has been levied on consumption.

“We have taxed the rich, most of the revenue will be collected through it so that we do not have to ask for money from others and be able to reduce our budget deficit,” he said.

The Finance Minister said that my companies will also pay Rs200 million more tax than before and therefore if we are asking to pay more tax than others, then we are also contributing.