Finance Supplementary Act 2022
The purpose of the Finance (Supplementary) Bill, 2021 was to give legislative effect to the taxation, proposals of the Federal Government to achieve efficiency, equity in the tax system, widening of tax base as well as documentations of the economy.
The State Bank of Pakistan Amendment Bill 2021 and the Finance Supplementary Bill 2021 have both been presented to the National Assembly to revive the IMF’s program of $6 billion at a standstill.
The proposed changes include elements to tax 375 billion rupees under income tax, sales tax and federal excise laws. Whereas the government has withdrawn Rs 343 billion tax exemptions from the sales tax which will affect all the segments of society.
The focus of the bill is centered at supporting the domestic economic stability, sustainable growth and avoid repeated booms and busts that have outlined Pakistan’s past and led to painful consequences in terms of higher inflation, higher poverty and lower growth.
It would also balance the framework of necessary operational and financial autonomy to the State Bank with new mechanisms for enhancing transparency and strengthening accountability.
The Finance Supplementary Bill 2021 was presented to the National Assembly on last Thursday, passed with majority of the votes in favor and eventually became the Finance Supplementary Act 2022 after President of Pakistan’s approval on that bill. Lastly in turn, the Finance Supplementary Bill 2021 transmuted into the Finance Supplementary Act 2022.
Key Notes from Finance Minister Shaukat Tarin’s address in National Assembly:
A sales tax of 8.5% will be levied upon 1,800cc domestic and imported hybrid cars. A tax of 12.75% will be levied upon 1,801 to 2,500cc hybrid vehicles while imported electric vehicles will be taxed at 12.5%.
No general sales tax (GST) will be imposed on a 200g carton of milk, while a 17% GST will be imposed on formula milk worth more than Rs500. Tax on imported vehicles was also increased under the changes, from 5% to 12.5%. The federal excise duty on all imported vehicles will remain the same.
There will be a duty of 2.5% on locally manufactured 1,300cc vehicles, compared to the 5% proposed earlier. The duty on locally manufactured 1,300 to 2,000cc cars was also be reduced to 5% from 10%. A 10% duty will be imposed on locally manufactured cars greater than 2,100cc.
Proposed 17% GST has been imposed on over 150 items to yield Rs. 360 billion
A 17% of GST has been imposed by the federal government on more than 150 items of different varieties which are inclusive of imported plant and machinery, luxury items, dairy products, meat/ poultry, pharmaceutical raw materials, commercial products, beauty/dietary supplements, computers and other goods in Pakistan which are valued at Rs. 343 billion. Cottonseed / Sunflower / Canola Seeds, Cell Phones (over US $ 200 -500), Branded Iodized Salt, Energy Saving Lights / Tube Lights, and Imported Reusable Scrap Metal.