Tax on salaries, imported solar panels cut

ISLAMABAD: The Finance Minister has announced tax relief for salaried individuals. Tax on individuals drawing salaries between Rs 50,000 to Rs 100,000 per month will be reduced to 1pc. Furthermore, the allocations for BISP have been enhanced to Rs 716 billion and the tax on imported solar panels has been reduced to 10pc.

He made this announcement in the House while winding up the budget debate, as the 204 recommendations of the Senate Standing Committee on Finance were also adopted prior to the prorogation of the budget session. The minister sounded optimistic that like the previous year, over 50 percent recommendations of the finance committee will be included in the final budget.

Explaining the income tax on withdrawal of salaries, he maintained that only 1 pc tax is a symbolic and practical step showing that the state does not want to overburden this segment. He also contended that the reduction in the income tax on salaried class was already part of the proposed budget. He remarked, “we hope that this move will not only result in the increase of disposable income of the class but also restore their trust in the taxation system. It is pertinent that initially, the tax rate for individuals earning between Rs600,000 and Rs1.2 million a year was proposed to be cut to 2.5pc from existing 5pc, which now has been reduced to 1 pc.

Regarding the widely criticised power of arrest proposed to be given to the FBR, Aurangzeb assured the House that more safeguards have been added to the law to prevent misuse of authority while expressing the government’s firm commitment to take the country towards inclusive and sustainable economic growth, where all get equal opportunities to make progress. He also pointed out that the federal expenditures have been envisaged to increase by 1.9 percent in the next fiscal year as compared to ten or twelve percent in previous years. The finance minister sounded optimistic that like the previous year, over 50 percent recommendations of the Finance Committee will be included in the final budget.

The finance minister confirmed that the initial 18pc tax proposed on imported solar panels in order to promote the local industry has been reduced to 10pc. He added that in light of the discussions in both houses of the parliament and the suggestions by its members, the government demonstrated seriousness and flexibility in this context. The minister explained that this tax will be applicable on the 46 percent imported parts of solar panels and claimed that the prices of solar panels will this increase only by 4.6 percent. He also noted that before the enforcement of 10 percent tax, the government has received information about hoarding and unlawful profiteering by certain elements. Aurangzeb emphasized the increase in prices by ‘some opportunists’ even before enforcement of the proposal was condemnable while warning those hoarding imported solar panels that action would be taken against them under the law.

Aurangzeb said the relief and social protection measures in the budget reflected that the government was alive towards its responsibilities and pointed out that the budget of Benazir Income Support Programme has been enhanced to Rs716 billion from Rs592 billion.

Later, the minister also clarified that only sales tax was being imposed in the merged districts of ex-Fata and there was no proposal about income tax. “Even the sales tax will be staggered and in phases. The allocations for the merged districts are made every year and for next year, an increase is also made in the allocation,” he explained while responding to a point of public importance raised by Senator Dost Muhammad of Pakistan Tehreek-e-Insaf from Khyber Pakhtunkhwa. The PTi lawmaker noted that the merged districts were extremely poor and that was why the previous governments had exempted them from taxation for the last 10 years.

Meanwhile, at the very outset of the proceedings Leader of Opposition Syed Shibli Faraz complained about non-provision of the report of the Senate Standing Committee On Finance containing the final recommendations and wondered how would they have ownership of the recommendations which they had not seen. “We have no idea how many of the recommendations, we gave were included in the report,” he said.

Shibli also emphasized that the chairman of the finance committee should have been from the opposition, as it is their job of oversight. He regretted that the budget has put more tax burden on the people. Shibli charged that the government has not reduced its expenditure and the economy is being run on loans, which cannot be a sustainable basis. “The budget is devoid of any vision, as total reliance is on loans and no new avenues of revenue have been mentioned in it and there is no plan to reduce poverty,” he noted.

PTI parliamentary leader Senator Ali Zafar called for adhering to Article 73 of the Constitution and sharing the House standing committee’s recommendations with the members at least a day before so that they could go through them before adoption in the Senate. Zafar pointed out presently, this article was not being followed and the members were not given report of the committee. “The responsibility under the article should be fulfilled as the Senate can only give recommendations for which its relevant committee do the exercise but it can’t approve them, these are to be adopted by the House after consideration of every bit of it,” he said.

Rana Mahmoodul Hassan of PPP spoke for a strategy to improve the plight of the agriculture sector from the present worrying situation and also proposed imposition of water emergency in the country and chalking out a short and long-term policy on the issue. Senator Manzoor Kakar thanked the government for accepting the proposals and said that ‘we are a nation that believes in democracy and without the opposition, things can’t be done properly’.