Pakistan Increases Tax Burden in Revised 2024-25 Budget

Pakistan’s government has intensified efforts to meet revenue targets by introducing new tax measures in the revised Finance Bill 2024. Here’s a breakdown of the key changes:

  • Higher Tax for High Earners: Individuals and businesses with taxable income exceeding Rs. 10 million will face a 10% surcharge on their income tax.
  • Tax on Stationery: A 10% sales tax will now apply to most stationery items, excluding exercise and textbooks.
  • Cement Price Increase: The Federal Excise Duty (FED) on cement has been raised from Rs. 3 to Rs. 4 per kg, potentially impacting construction costs.
  • Increased Tax on Air Travel: The government has raised excise duty on international air travel, including business and club class tickets. Economy and economy plus tickets will also face a new duty.
  • Tax on Farmhouses and Large Homes: A new capital value tax (CVT) applies to farmhouses and large residential properties in Islamabad based on size, not value. The CVT will be Rs500,000 for farmhouses with an area between 2,000 and 4,000 square yards and Rs1,000,000 for those exceeding 4,000 square yards. For residential houses, the CVT will be Rs1,000,000 for properties between 1,000 and 2,000 square yards and Rs1,500,000 for those exceeding 2,000 square yards.
  • Hybrid Vehicle Tax Extension: The reduced tax rate for certain hybrid vehicles will continue until June 30, 2026.
  • Sales Tax Extension for Tribal Areas: The government extended sales tax benefits for the former Federally Administered Tribal Areas (FATA) for another year to support economic development.
  • Property Transfer Tax: A 3% duty applies to the transfer of commercial property and the first transfer of residential plots or properties by developers.

Impact:

These new taxes aim to generate additional revenue for the government, but they are likely to:

  • Increase the financial burden on individuals and businesses.
  • Raise the cost of essential goods (stationery) and construction materials (cement).
  • Potentially impact economic growth and development.

Following Developments:

It’s recommended to keep visiting our website for updates on the implementation of these measures and their impact on the Pakistani economy.

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