Treasure Magazine

Treasure Magazine

FBR to withdraw tax relief on vehicles, mobile phones

2 min read

ISLAMABAD: Federal Board of Revenue (FBR) has submitted proposal to the federal government to withdraw tax relief worth Rs 350 billion on different sectors including mobile phones industry and imported vehicles.

The decision has been taken by the FBR as per the condition of International Monetary Fund (IMF) to withdraw the all tax exemption by December 12.  After getting approval from the National Assembly or presidential ordinance, the government would be able to take around $1 billion from the IMF.

The sources in the FBR said that schedule 6 of the Finance bill 2021-22 would be amended for reversing tax exemptions.

Detailing the sectors that would be affected after the proposed bill, they said that tax exemptions on mobile phones, stationery, and pack food items will be lifted besides also eliminating sales tax exemption on zero-rated sectors.

Furthermore, a uniform 17 percent sales tax will be applied for all previously exempted sectors, they said adding that taxation on luxury items will be increased besides also imposing an additional tax on imported vehicles.

However, the sources said that exemptions on food items and medicines will remain applicable.

Pakistan has to approve the proposed tax exemption reversals before the IMF meeting on 12 January 2022.

The development came after Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on revival of $6 billion Extended Fund Facility (EFF) that was suspended in April this year.

“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF,” read a statement issued by the Fund.

“The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms. Completion of the review would make available SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners.

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