The National Assembly approved the next fiscal year budget. It added taxes on income, assets, and goods. Citizens now face an extra Rs1.7 trillion in taxes. The new budget funds a 30% larger federal budget.
The government introduced Rs200 billion in new taxes. This mini-budget came just before the 2024-25 fiscal year.
Prime Minister Shehbaz Sharif‘s government made life harder for citizens. But it exempted serving and retired bureaucrats and military personnel from property sales income tax. The government also avoided taxing stock market transactions. Instead, it increased taxes for both salaried and non-salaried individuals.
Non-Salaried Individuals Confronted with 50% Taxes
Salaried people now face a 39% income tax rate. The Association of Persons will pay 44% income tax. Non-salaried individuals face a 50% income tax rate.
New measures made it more expensive to leave the country. The government added a 10% surcharge on income over Rs10 million. This raises the tax rate for salaried individuals to 39% and non-salaried to 50%.
The government also imposed FED on property transfers. Filers face a 3% tax, non-filers a 5% tax. Large farmhouses and homes now face new taxes. These new taxes will yield Rs4 billion.
Property Market Hit with New Taxes
The National Assembly approved several tax exemptions. No withholding tax on the sale of property by wounded or retired armed forces and government personnel. The tax rate on stock funds’ capital gains reduced to 15%. A proposed 75% tax on non-filers’ phone calls was withdrawn.
Cement now has a 100% increased federal excise duty (FED), making it Rs4 per kg. This will yield Rs80 billion next year and raise cement prices by Rs100 per bag.
The government also imposed a 5% FED on lubricant oil. This will bring in Rs15 billion. FED on international travel tickets increased to generate Rs55 billion next year. Economy class tax increased by 150% to Rs12,500. Business class tax increased to Rs350,000 for the Americas, Rs105,000 for the Middle East and Europe, and Rs210,000 for Australia and New Zealand.
FATA retains tax-free status with Rs52 billion in exemptions. Electricity supply to Azad Jammu and Kashmir is exempt from sales tax. Import of gold, certain medicines, and bovine semen are also exempt from 18% GST.
Builders and Developers Face New 10-15% Sales Tax
The government also targeted non-resident citizens with significant economic presence in Pakistan. The tax law now covers transactions and services involving non-residents. It also tightened income tax evasion routes.
A 10% to 15% income tax now applies to sales by builders and developers. This will yield Rs20 billion more next year. The National Assembly approved Rs50 million penalties on telecom companies for not blocking non-filers’ SIMs.
Packaged milk, infant milk, mobile phones, vegetables, and fruits from Afghanistan now face 18% sales tax. Newspapers, books, and supplies to charitable hospitals remain exempt.
Petroleum Levy Set at Rs70/Litre in Approved Budget
The budget also includes a Rs1,000 stamp duty on future financial transactions. A Rs70 per litre petroleum levy was approved, higher than current rates but lower than proposed. The government cut the PSDP by Rs250 billion to keep the petroleum levy at Rs70 per litre.
The government also allowed the Abandoned Properties Organisation to keep Rs14 billion of public funds. The National Assembly approved an 18% sales tax on imported items and supplies to charitable institutions. However, 18% GST on corporate dairy farm milk and recycled copper sales was introduced. Major changes include retaining 10% sales tax on LPG cylinders and 15% on branded shops’ sales. Hybrid vehicles get an 8.5% reduced GST until June 2026.
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