ISLAMABAD: President Asif Ali Zardari has given the green light to the tax-heavy Finance Bill 2024, which will take effect from July 1, marking the start of the next fiscal year.
Approval Process
The approval, under Article 75 and on the advice of Prime Minister Shehbaz Sharif, follows the recent passage of the budget through the National Assembly after amendments.
Budget Overview
The federal budget, amounting to Rs18.877 trillion for fiscal year 2024-25 (FY25), has drawn criticism from opposition parties, labeling it as “economic terrorism” against the populace.
Support and Passage
The Finance Bill garnered support from the ruling alliance, including the Pakistan Peoples Party (PPP), and was passed with a majority vote after thorough clause-by-clause scrutiny and voting on amendments, all opposition amendments were rejected.
Constitutional Requirement
As per constitutional provisions under Article 75(1), the president is required to give assent to a bill passed by parliament within 10 days of its receipt.
Amendments and Provisions
The Finance Bill includes several amendments, such as exempting retired and serving federal and provincial employees, retired and serving armed forces personnel, and individuals injured in war from advance tax on the sale or transfer of immovable property under Section 236C.
Income Tax Adjustments
Additionally, the income tax rate for Associations of Persons (AoPs) has been reduced from 45% to 40% on annual incomes exceeding Rs5.6 million. However, AoPs or individuals earning over Rs10 million annually will now face a 10% surcharge on income tax.
Excise Duties
Furthermore, the bill imposes a Rs4 per kg federal excise duty on cement, expected to yield Rs80 billion, thereby increasing cement prices. It also introduces a 5% federal excise duty on lubricant oil, projected to generate an additional Rs15 billion.
Travel Tax Increase
The Finance Bill also includes increased federal excise duties on international travel tickets, with rates set at Rs12,500 for economy class and varying rates for business class tickets depending on the destination.
Capital Value Tax
Moreover, a capital value tax has been introduced on farmhouses and residential houses in Islamabad, with taxes ranging from Rs500,000 to Rs1.5 million based on property sizes.
Revenue Target
Setting a challenging target, policymakers aim to achieve Rs13 trillion in tax revenue for the upcoming fiscal year, representing a 40% increase from the current year’s estimates. This move is part of efforts to strengthen negotiations with the International Monetary Fund (IMF) for a potential loan of $6 billion to $8 billion.
PM’s Perspective
In an interview with The News, PM Shehbaz Sharif described crafting the budget in consultation with the IMF as a daunting task. He highlighted balancing IMF pressures with public expectations and ensuring minimal impact on citizens through continuous discussions and strategic decisions.
Leadership Commitment
Shehbaz emphasized his commitment to supporting his team and navigating tough financial decisions to alleviate burdens on the public.
