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Thursday March 28, 2024

Ordinances soon for Rs290 bn taxes

The federal government has to inform the International Monetary Fund (IMF) before March 24 about the abolition of income tax exemption

By News Desk
March 20, 2021

ISLAMABAD: The federal government plans to introduce two ordinances under which Rs290 billion taxes would be imposed.

The first ordinance will abolish income tax exemptions given to various sectors. Geo News reported while quoting sources that procedure for introducing a presidential ordinance to abolish the income tax exemption of Rs140 billion has been completed and a summary in this regard has been approved by the federal cabinet.

The sources further said that the federal cabinet has approved the ordinance through a summary circulation, adding that the bill was not submitted to the parliament for approval due to lack of time.

The federal government has to inform the International Monetary Fund (IMF) before March 24 about the abolition of income tax exemption, the sources added.

Under the IMF conditions, power consumers would endure burden of Rs150 billion surcharge to enable the government to control the spiralling circular debt. Sources said the government has finalised preparations to bring an ordinance in this regard.

Meanwhile, the StateBank of Pakistan announced the policy rate will be maintained at 7 percent in a bid to support economic recovery.

The decision was taken at a meeting of the Monetary Policy Committee (MPC), following which a statement was issued by the central bank. The committee noted that the "current stance of monetary policy remains appropriate to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability".

The SBP said that the committee reviewed the recent rise in inflation and concluded it was "primarily driven by supply side factors and saw little signs of demand led inflation". The central bank committee expects that as this "temporary increase in inflation", that is a by-product of "administered prices" subsides, "inflation should fall to the 5-7 percent target range over the medium-term".

It said that in the absence of "unforeseen developments", it is expected the monetary policy settings to "remain broadly unchanged in the near term". The MPC foresaw that as economic recovery stabilises and makes a return to full capacity possible, the policy rate in the future will be "measured and gradual to achieve mildly positive real rates".

On the growth front, it said that in spite of the recent momentum, risks prevail due to the recent emergence of the third wave of the coronavirus pandemic, just as Pakistan has begun its vaccination drive.

The central bank left interest rates unchanged at 7 percent for a third consecutive meeting in January after slashing them five times last year by a total of 625 basis points (bps). Meanwhile, the weekly inflation report issued by the Pakistan Bureau of Statistics showed that out of 51 items, the prices of 22 items increased, nine items prices decreased, and prices of 20 items remained unchanged. In a related development, Attorney General Khalid Javed Khan called on Prime Minister Imran Khan in Islamabad to discuss legal and constitutional matters.