Finance Act comes into effect | The Express Tribune

The federal government has acceded to the five demands of the International Monetary Fund (IMF) and has implemented the steps mentioned in the Finance Act, 2023, which has also been uploaded on the website of the taxman, the Federal Board of Revenue (FBR).

According to the Finance Act, 2023, additional taxes of Rs415 have been imposed.

The rate of income tax for people who earn more than Rs200,000 per month or Rs2.4million per annum has been increased by 2.5% to 22.5%. People with Rs2.4 million annual income will also pay a fixed income tax of Rs165,000.

Under the Finance Act, 2023, the rate of income tax for people who earn up to Rs3.6million per annum has been increased by 2.5% to 27.5%. People with Rs3.6 million annual income will also pay a fixed income tax of Rs435,000.

The rate of income tax for people who earn more than Rs6million per annum has been increased by 2.5% to 35%. People with Rs6 million annual income will also pay a fixed income tax of Rs1.1m.

A 0.6% income tax will be imposed on a banking transaction of more than Rs50,000 made by a non-filer.

After increasing petroleum levy from Rs50 to Rs55, the government has also imposed an additional super tax on income but the income slab has been raised from Rs300 million to Rs500 million meaning that a 10% super tax will be imposed on an annual income of more than Rs500 million. However, banking companies will pay 10% super tax on an annual income of Rs300 million.

The sectors that will pay 10% super tax include petroleum, gas, pharmaceuticals, sugar, textiles, fertilizer, iron, steel, LNG terminal, oil marketing, oil refineries, airlines, automobiles, beverages, cement, chemicals, cigarettes and tobacco sectors.

The companies with an annual income of Rs400 million to Rs500 million will pay 8% super tax. The rate of super tax on an annual income from Rs350 million to Rs400 million has been raised from 4% to 6%.

Companies earning Rs250 million to Rs300 million annually will pay super tax at the rate of 3%; companies earning Rs250 million to Rs200 million will pay at the rate of 2%; the companies earning Rs200 million to Rs150 million will pay 1% while companies earning Rs150 million will pay 0% super tax.

Five percent federal excise duty has been imposed on fertilizers. This duty will help the government collect an additional amount of Rs35 billion.

The government has increased tax on sale and purchase of property by 1%. This will help in generating an additional revenue of Rs45 billion.

After the imposition of the act, the tax on every 200g pack of formula milk for children which was available at Rs500 has risen from 5% to 6%. The rate of sales tax on taxable items being provided to unregistered people has been raised from 3% to 4%.

The government has, however, given a tax exemption on supply of wheat bran. This exemption will be effective immediately and retrospectively from July 2018.  The companies—including pharmaceutical suppliers—registered under the Drug Act, 1976 are also exempted from taxes.

The government has raised excise duty on cars having more than 2000 cubic centimeter (cc) engines. A fixed tax of 6% of the value of the vehicle has been imposed on cars having 2100cc to 2500cc engines.

Earlier filers paid a duty of Rs150,000 while non-filer paid a duty of Rs300,000 on cars having 2501cc to 3000cc engines but  now such car owners will have to pay a fixed 8% tax of the value of the vehicle at the time of car’s registration.

Previously filers paid a duty of Rs200,000 while non-filer paid a duty of Rs400,000 on cars having over 3000cc engines but  now such car owners will have to pay 10% of the value of the vehicle as duty at the time of car’s registration.