Prime Minister Nawaz Sharif has officially requested President Mamnoon Hussain to summon the National Assembly and Senate Sessions on 24th and 26th May respectively, to present the Federal Budget 2017-18.
According to official channels, a formal summary has been sent to the president by the prime minister consisting of details regarding holding a joint sessions of both houses of Parliament on 1st June. The president will conduct an annual presidential address on this day which will be his fourth presidential address since his tenure.
It has been finalized that Finance Minister Ishaq Dar will conduct his budget speech on 26th May in the National Assembly. He will present all his budget documents in front of the senate. The officials claim that the government has prepared and finalized all its drafts including Public Sector Development Program (PSDP) and Economic Survey for 2017-18.
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No major relief is expected other than salary increase of government employees
The sources have revealed that there might be some increase in the salaries and pension funds of government employees; however, the rate of increase has not been finalized as yet. Apart from salary raise, there will be no major relief in the upcoming budget. It is expected that the prime minister will chair a meeting on federal budget after his arrival from Saudi Arabia. However, if the PM intervenes and brings some major relief programs then we can expect some incentives.
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Rumor says no new taxes will be implemented
The tax officials have informed that the government has not finalized the budget speech which focuses on the taxation part, especially the tax rates. One of the tax officials has stated:
“No new tax will be imposed in the budget”
He also added the government will emphasize on tax rationalization and reverse tracking of tax rates. Sources reveal that some major tax and duty reductions are expected for various industries particularly on raw materials.
Stakeholders from varied industries (IT, poultry and textiles) have urged the tax authorities to reduce taxes and duties in the upcoming budget. The commerce ministry has given a detailed summary to tax officials regarding changes in tax regime for various sectors.
Consequently, the tax authorities will present their proposal to the finance minister this week. Therefore, it is expected that the government will implement zero-rating of five sectors including:
- Textile
- Leather
- Sports
- Carpet
- Surgical
Another official quoted:
“We are considering including a few more sectors in the zero-rating regime – rice milling and processing, fish packaging and processing, meat and meat processing and pharmaceutical”
It has also been proposed to increase the limit of tax probing details of a filer for up to 10 years in backdates from the current 5 years in case of return filers. The probe could be increased to 10 years for non-filers.
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Some relief for the capital market
The economic experts have predicted a major relief for the capital markets in the Federal Budget 2017-18. Moreover, tax credit will be allowed for up to 4 years instead of 3 years. This will encourage new companies to get listed in the stock market. In addition, the withholding tax rate on commission and stock exchange services are also expected to be slashed.
The exemption threshold is also expected to increase to Rs500,000 from Rs400,000 for the salaried segment.
The definition of a resident person is also expected to change if the government agrees. Therefore, if implemented, all nationals will have to disclose their assets owned aboard.
In addition, the FBR is contemplating to reduce some duties on cigarettes based on the request of two major players in the industry. However, the health ministry is demanding an increase in these taxes.
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