Mohsin Siddiqui (Chief Reporter)
The government has introduced additional taxation measures through amendments to the Finance Bill 2024. These amendments, announced on Friday, come on top of the Rs1.761 trillion in taxation measures already implemented in the budget for the fiscal year 2024-25. The new measures include a 10 percent surcharge on the tax liability of individuals and associations of persons with taxable income exceeding Rs10 million, increased excise duties on various goods and services, and new capital value taxes on properties in Islamabad.
The most notable amendment is the imposition of a 10 percent surcharge on the income tax liability of every individual, including salaried individuals and associations of persons, where the taxable income exceeds Rs10 million. This surcharge is applicable as per Division-I of Part-I of the First Schedule of the Finance Bill 2024. This measure is aimed at increasing the tax burden on higher income brackets, contributing significantly to government revenue.
The government has also revised the Federal Excise Duty (FED) on several items. The FED on cement has been increased from Rs 3 per kg to Rs 4 per kg. This follows an earlier increase from Rs 2 per kg to Rs 3 per kg in the initial budget for 2024-25. Additionally, a new excise duty of Rs15 per kg has been introduced on the supply of white crystalline sugar by any person to manufacturing, processing, or packaging entities.
Excise duty on international air travel has also seen substantial hikes. Business and club class air tickets now have increased excise duties depending on the destination. For instance, individuals traveling to the Middle East and African countries, including destinations like Dubai and Saudi Arabia, will now pay Rs105,000, up from Rs30,000. Travelers to the United States and Canada will face a duty of Rs100,000, while those heading to North America, Latin America, and Canada will pay Rs350,000, up from Rs250,000. Similar increases have been made for travel to Europe, New Zealand, Australia, China, Malaysia, and Indonesia.
The Federal Board of Revenue (FBR) has introduced a new capital value tax (CVT) on farmhouses and residential houses within the Islamabad Capital Territory. The CVT is based on the area of the property, regardless of its value. For farmhouses, the CVT is Rs500,000 for areas between 2,000 and 4,000 square yards and Rs1,000,000 for areas exceeding 4,000 square yards. For residential houses, the CVT is Rs1,000,000 for areas between 1,000 and 2,000 square yards and Rs1,500,000 for areas exceeding 2,000 square yards.
The Finance Bill 2024 also includes several other amendments aimed at broadening the tax base and ensuring fiscal discipline:
Sales Tax on Stationery: A 10 percent sales tax has been imposed on all stationery items except exercise books and textbooks.
Reduced Duty on Hybrid Vehicles: The reduced rates of 8.5 percent and 12.75 percent for hybrid vehicles with engine capacities up to 1800cc and between 1801-2500cc, respectively, will continue until June 30, 2026.
Sales Tax Benefits for Tribal Areas: Sales tax benefits for erstwhile tribal areas have been extended for another year until June 30, 2025.
Tax on Export Income: The government has maintained its stance of taxing export income at a corporate tax rate of 29 percent plus applicable super tax. This replaces the previous rate of one percent of export turnover, which was full and final.
According to tax experts, these amendments reflect the government’s commitment to improving revenue collection and maintaining fiscal discipline. The introduction of a surcharge on high-income earners and increased excise duties on goods and services are expected to generate significant additional revenue.
The continuation of reduced duties for hybrid vehicles and the extension of sales tax benefits for tribal areas indicate a balanced approach, combining revenue generation with incentives for sustainable development and economic inclusion.
