Prime Minister Imran Khan has approved a financial bill to be introduced in the National Assembly next week to revive the 6 6 billion IMF loan program, under which tax exemptions in 80 sectors will be abolished by reforming the tax system.
The IMF has demanded the abolition of income tax exemption worth Rs 140 billion. The final volume of this tax exemption will be known when this fiscal bill is tabled in the Assembly.
Sources in the Prime Minister’s Office told The Express Tribune that the Income Tax (Second Amendment) Bill, 2021 covers tax regime for non-profit organizations, exemption for stock market listed firms, oil refineries, special economic zones set up under C-Pack and I.P. The National Assembly will be convened next week to introduce the bill.
In this regard, a meeting was held on Friday under the chairmanship of the Prime Minister in which the tax exemptions given to various sectors were reviewed and after that a meeting was also held in the FBR.
On the suggestion of Special Assistant to the Prime Minister for Petroleum Nadeem Babar, it was decided that depreciation allowance on mineral refining in certain sectors besides oil exploration and production would be maintained. They demanded an increase in electricity prices and the abolition of tax exemptions in some sectors through a financial bill.
Last month, in a staff-level meeting between Pakistan and the IMF, it was agreed to meet certain conditions of the international body for the release of a ق 500 million tranche. Did not accept
A member of the federal cabinet added that tax incentives would not be used as a tool to attract future foreign investors.
The FBR estimates that the tax rebate withdrawn in the fiscal bill will generate an additional revenue of Rs 1.15 trillion. Of this, Rs 378 billion will come from income tax rebate withdrawal alone.
According to sources, IPPZ will not get tax exemption in the future, however, the existing exemption given under the Sovereign Guarantee will remain intact, which will cost the national exchequer Rs 27 billion. No extension after June 30.
The tax exemption given to real estate investment trusts will be withdrawn. Last year, the exchequer had incurred a loss of Rs 5.3 billion due to tax exemption in this sector. The tax exemption on the Prime Minister’s Low Cost Housing Scheme will remain in force till June 2024. Plans launched after that will not be eligible to avail this subsidy.
The income tax exemption on investment in oil refineries will remain in force for the current calendar year. The aim is to find time for an agreement with Saudi Arabia on the establishment of an oil refinery over the next nine months. Will
The tradition of tax evasion in the non-profit sector will be abolished. Tax credits will be given to such institutions. Deductions in direct donations to these institutions will be withdrawn and tax credits will be offered accordingly. Terrorism, Flood Relief Fund, Punjab Chief Minister’s IDPs Relief Fund claimed tax expenses will be withdrawn.
However, donors will be able to claim credit. The tax exemption given to sukuk holders on income issued by Pakistan Sukuk Company Limited will be abolished. The income tax exemption given to Sports Board and the concession given to Pakistan Cricket Board will be withdrawn. Except for manufacturing and trading, the tax exemption will be abolished. There may be changes in the tax regime of the film industry.
Under the IMF agreement, Pakistan will raise additional revenue of Rs 700 billion through further measures to achieve its revenue target of Rs 6 trillion during the next financial year, which is 1.4 percent of the total economy. Discounts can also be terminated.
