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Parliament Likely to Approve Rs. 170 Billion Mini-Budget Tomorrow

After the approval of the mini-budget of Rs. 170 billion by the federal cabinet, the government has decided to get the approval of the Supplementary Finance Bill 2023 from both the Senate and National Assembly tomorrow (Wednesday).

Sources told ProPakistani on Tuesday that the government is empowered to impose regulatory duties and additional customs duty (ADCs) on the import of luxury/non-essential items through statutory regulatory orders (SROs) with immediate effect without waiting for the signing of the Tax Laws Amendment Bill 2023 by the president.

If the Supplementary Finance Bill 2023 is referred to the Senate Standing Committee on Finance, it would take a few days to complete the process till the signing of the Bill by the president. On the other hand, if any executive order is unanimously passed by the National Assembly, the applicability date of the Bill could be Feb 15, 2023. It has been decided that the clearance of both the houses would be taken on Feb 15 and subsequently assent by the president. In this case, the Supplementary Finance Bill 2023 will not be referred to the Senate Standing Committee on Finance.

However, the Federal Board of Revenue (FBR) is legally empowered to issue notifications to change the duty structure at the import stage after approval from the cabinet.

Usually, the sales tax and excise measures would be applicable from the next day of the assent given by the president. The tariff rationalization can be done through notifications. However, income tax measures are applicable from July 1 except withholding taxes.

The flood levy would be replaced with regulatory duties and additional customs duties, sources said.

According to the sources, Tax Laws Amendments Ordinance, 2023 to be promulgated to impose additional taxes of Rs. 170 billion would include a one percent increase in the standard rate of sales tax from 17 percent to 18 percent and withholding tax on banking transactions of non-filers.

The proposal to raise the federal excise duty (FED) on sugary drinks would generate Rs. 60 billion. The revenue impact of the proposed withholding tax on banking transactions of non-filers is nearly Rs. 45 billion.

Sources said that the FBR has worked out the revenue impact of Rs. 65 billion during Feb-June fiscal year 2022-23 (FY23) by increasing the standard rate of one percent sales tax from 17 to 18 percent.

The FBR has also proposed to raise the federal excise duty (FED) on imported and locally-assembled motor vehicles through the promulgation of the Tax Laws Amendment Ordinance to generate additional revenue in ‘mini-budget’. The revenue generation measure under consideration is to rationalize the rates of the FED on imported and locally-assembled motor vehicles. The FED on cigarettes would also be increased in the mini-budget, sources added.

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