Taxation proposals finalised CGT likely on property

Thursday, May 31st, 2012 8:30:04 by

ISLAMABAD, May 30: Officials have given final shape to taxation proposals, mostly laden with relief measures.

A source privy to the finalisation of the finance bill 2012, told Dawn on Wednesday that a host of measures have been taken to facilitate the existing taxpayers, and the thrust of the overall taxation proposals is to extend maximum relief to taxpayers and avoid additional burden on existing taxpayers as part of the election campaign by the ruling government.

For salaried people, exemption threshold is expected to be enhanced to Rs400,000 from Rs350,000. The number of tax slabs may also be reduced from 16 to four (7.5pc, 10pc, 15pc and 20pc). The four salary slabs are expected to be extended to associations of persons as well.

This will be a major shift in policy to give relief to AoPs in the next budget as per existing law AoPs are paying income tax at a fixed rate of 25 per cent.

According to the source, turnover tax is expected to be reduced to 0.5 per cent from the existing 1 per cent.

Tax officials have also proposed to impose two per cent capital value tax in the Islamabad Capital Territory in the budget.

As the federal government under the 18th Amendment could not levy such taxes in provinces, capital gains tax (CGT) on property is likely to be introduced across the country.

As per the proposals, 10 per cent CGT would be imposed on property profit if it was sold within one year of its purchase.

However, the rate will be 5 per cent if the property was sold by more than one year and within two years. There will be no
tax if property was sold after two years.

According to the source, the rate of general sales tax on sugar may be increased from existing eight per cent to 16 per cent in the budget.

Manufacturers are expected to be allowed to withhold sales tax from distributors and wholesalers which will help FBR trace tax-evaders.

The government is also considering reducing the rate of GST on all those inputs at import stage to a single digit, probably to around five or six per cent because of claims of input tax adjustments.

Under the customs, the government has decided to reduce maximum customs duties from 35 per cent to 25 per cent.

It has been proposed to reduce the rate of taxes on all those products which lead to more exports from the country.

The number of SROs will also be reduced substantially in the budget.

The government will continue to further phase out federal excise duty on various products, including cement in the budget. However, the federal excise duty on cigarettes is likely to be increased.

Islamabad News Sources

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