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June 14, 2019

Tax firms warn of budget’s inflationary fallout

Business

June 14, 2019

KARACHI: The federal budget for the fiscal year 2019/20 will have an acute inflationary impact from the date of its application, adding to the difficulties of the financially challenged population at large, tax practitioners said on Thursday.

These concerned were aired at a post-budget seminar organised by Karachi Tax Bar Association (KTBA) in collaboration with Pakistan Tax Bar Association (PTBA).

In his presentation on significant amendments introduced to indirect taxes through Finance Bill, 2019, Adnan Mufti, official at Shekha & Mufti, Chartered Accountants, said the budget would have inflationary impact.

Mufti said the prices of various consumer goods, including sugar, milk, soft drinks, garments, shoes, cooking oil, cement etc would increase significantly.

Mufti said there was need to reduce trust deficit to achieve tax revenue target of Rs5,550 billion. He said the government should take practical measures for boosting exports, employment, and protection of local industry missing.

Imports of luxury items like chocolate, eatables, shaving razors, heavy cars, etc should be banned, he said adding, revenue shortfall due to this ban for the initial short-run should be absorbed for a long-term sustainability.

“Machinery parts and accessories used in the textile sector will be free from custom duty; it’s a mismatch since zero-rating for textiles has been abolished in sales tax,” he said pointing out the anomaly.

Salman Haq from EY Pakistan highlighted major changes such as salary taxation and corporate tax rates.

Haq said in the budget the concept of salaried taxpayer was revisited as one whose taxable salary exceeded 75 percent of his taxable income for the year would pay tax on the basis of tax slab for business individual.

“The revised tax slab had been introduced. Zero percent tax is applicable where taxable income does not exceed Rs600,000 and 35 percent would apply where taxable income exceed Rs75 million in a year,” he said.

He further said currently the rate for company was 29 percent for the tax year 2019 which was to be reduced by one percent up till tax year 2023.

However, the government has decided to keep the rates static at 29 percent from tax year 2019 and onwards, Haq added.

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