The federal cabinet has approved a new budget to impose a tax of Rs 140 billion to meet a condition of the International Monetary Fund (IMF). An increase of 1.4 Trillion rupees through tax exemptions.
The Income Tax Second Amendment Act 2021 approved in a cabinet meeting chaired by Prime Minister Imran Khan after resisting the IMF’s demand for more than a year. The IMF suspended more than 6 billion a year ago after the prime minister refused to raise electricity prices and present a mini-budget. Imran Khan has now accepted these demands with about 30 other big conditions for the restoration of the bailout package.
A cabinet source told the Express Tribune, “The Federal Board of Revenue (FBR) had proposed to withdraw 80 income tax exemptions but the Prime Minister rejected the withdrawal of at least four exemptions.”Express Tribune
Schedule 13 introduced
The tax law introduces a new Schedule 13 to protect the income tax exemptions of about 60 non-profit organizations. “The prime minister has refused to withdraw the tax exemption on special economic zone income tax exemption, text boards income tax exemption, corporate agriculture enterprise income tax exemption and renewable energy projects,” the source said.
Protection of sectors in coming budget
The Prime Minister said that corporate agriculture, special technology zones and SEZs are important initiatives of the PTI government. Which will be protected in the budget. Also, independent energy producers (IPPs) who will sign agreements with the government by June this year. They will be allowed to get income tax exemption.
Income tax exemptions for these housing units that will be completed by June 2024 under the Prime Minister’s Scheme will continue to receive income tax exemptions. The Cabinet was informed that the cost of tax exemption is now equivalent to 2.9% of GDP. Which is about 2% in India, 1.9% in Bangladesh and 1% in South Korea.
“We want to increase our reliance on direct taxes. So the 380 billion share of income tax rebates has been withdrawn,” he said. The corporate sector is the richest sector of the economy, ”said Ghani, who will retire next month. Dr. Abdul Hafeez Sheikh said that the income tax exemption reduced to maintain a uniform tax system. The Minister said that corporate sector income tax exemption reduced.
Prime Minister Imran Khan said, “Tax reforms aimed at simplifying the tax code, eliminating loopholes in the system, reducing the discretionary powers of tax collectors and taxpayers and improving transparency in the tax system. Introducing automation to make sure. “PM Imran Khan
The FBR has estimated the total cost of tax exemption at Rs 1.15 trillion. Including Rs 378 billion income tax exemption. The total revenue deduction was Rs 212 billion and the cost of tax credit is Rs 104.5 billion.