Budget 2021-22 discussion ended by finance minister Shaukat Tareen in Senate on Friday 25 July 2021.
In the initial announcement of taxes on the 11th July budget session many taxes were proposed which now have been eliminated in the final session on 25th July 2021.
This article briefly explains which taxes have been finalized by Govt for the fiscal year 2021-22 and which will be implemented from July 1, 2021.
Withholding Tax on Bank transactions
For Nonfiler there was an FBR withholding tax of 0.6% on bank transactions whether they are in cash or in transfer. 0.6% means for every withdrawal of Rs100,000/- withholding tax of Rs600 was deducted from the Nonfiler bank account.
This withholding tax has been eliminated by the Federal Govt.
Now the Nonfilers will have to pay no tax on their cash withdrawal from their bank accounts and transfer of funds from one bank account to another with the same bank or another bank or on the issuance of bank instruments like Payment order, demand draft or call deposit.
This will put a positive impact on bank deposits as many people were reluctant earlier to pay withholding taxes on withdrawals of their own money. Now it will be implemented from first July 2021.
Taxes Reduced on Cars Up to 1000 CC
Taxes in the final session of budget on cars up to 1000 CC capacity engine have been reduced by Govt.
Earlier on 11th June when the budget was presented it was announced that Govt is going to provide relief to the auto industry by cutting taxes on cars’ engine capacity up to 850 cc.
but later on, it post-budget discussions it was decided to extend this relief to 1000 cc cars.
It will highly impact the auto industry of Pakistan as the production capacity of the automobile industry will be increased due to more demand in sales.
Further people will have more options to reduce car prices as up to 850 CC just three cars which are being manufactured locally have been given tax relief including SUZUKI Alti, Prince Pearl, and United Motors.
Now as the tax relief has been expanded to 1000 CC cars more cars have come under the umbrella of tax relief. these 1000 cc cars include WagonR, Cultus, and Kia Picanto.
In tax relief for the auto industry sales tax has been reduced from 17% to 12.5%. Federal excise duty which was 2.5% now it has been reduced to just zero percent.
Value-added tax has also be lessened on cars up to 1000CC capacity engine.
Pension and Salary rise
10% salary and Pension rise has been given to Govt employees which will be implemented from July 2021.
Federal Govt has already given 25% disparity allowance to all those federal Govt employees who earlier were not receiving this allowance and their salaries were below to other department employees in comparison.
Punjab Govt has also provided 25% disparity allowance to the provincial Govt employees and 10 rise has been given in budget for salaried and pensioners.
Withdrawal of Provident Fund Taxes
Earlier it was suggested in the budget that 10 % withholding tax be imposed on salaried person provident funds and their medical allowances which after a final discussion on a budget has been withdrawn.
The Provident fund is the amount deducted by the employer from each month’s salary and equally contributed by the employer. The salaried persons receive profit on their provident fund as well. Govt announces that 10% WHT to be deducted from the provident fund on retirement and medical bills received by salaried persons. Same has been withdrawn back by the Govt.
Tax on Calls
Govt has imposed taxes on call duration. 75 paisa will be deducted on calls above 5 minutes.
Initially, it was suggested that tax will be deducted on SMS, calls above 3 minutes, and on the internet. Now tax has just been imposed on calls above 5 minutes. There will be no tax on the Internet and on SMS.
Gold Tax Rates
On Gold tax, Rates will be 1% and on Silver tax rates will be 3% but on value addition of Gold tax rates will be 17%
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