The federal government has presented the budget for the upcoming year, coinciding with the approaching general elections. The government claims that no new taxes have been imposed, although previous administrations have made similar claims only to reverse them in subsequent mini-budgets. However, salaries and pensions of government employees have been increased, along with a raise in minimum wages.
For detailed information, please refer to this blog: Budget Breakdown: The Most Noteworthy Features of 2023-24 Budget
Regardless of the government’s claims, certain goods and services are expected to undergo price changes if the budget proposals are approved. The following information has been analyzed to assess its potential impact on individuals.
Automobile Imports
The budget proposes lifting the current restrictions on fixed duties and taxes for importing used Asian-made vehicles above 1300cc. This change may result in price increases for such vehicles.
Cheaper Dining Out
To promote digital payments at restaurants, the government has announced a reduction in the tax rate from 15% to 5%.
IT Sector & Freelancers
The concessional income tax rate of 0.25% for the IT sector has been extended until June 30, 2026. Freelancers earning up to $24,000 per year will be exempt from sales tax registration and filing tax returns. Additionally, a simplified one-page income tax return will be introduced for freelancers. IT and IT-enabled service providers can import software and hardware duty-free, up to 1% of their total export proceeds. The sales tax rate for IT services has been reduced from 15% to 5%.
Clean & Cheap Energy
Customs duty exemption on raw materials used in the production of solar energy products, including inverters, solar panels, and batteries, is introduced, promoting renewable energy adoption and potentially reducing costs for consumers.
Other Price Changes
Diapers, sanitary products, second-hand clothing items, contraceptives, and purchase of immovable property by non-resident Pakistanis through foreign remittances are expected to see price drops. Builders and individuals constructing their own houses will benefit from reduced tax liabilities.
However, certain factors may contribute to price increases, such as higher withholding tax rates on payments to non-residents using cards, reintroduction of an advance adjustable withholding tax on cash withdrawals for non-active taxpayers, a 15% tax rate on electric power transmission services, a federal excise duty on energy inefficient fans and incandescent bulbs, and an increased sales tax rate for point-of-sale retailers dealing in leather and textile products.
It is important to note that the budget did not address import of mobile phones, their local manufacturing, PTA fees, or provide significant details on the automobile sector, which has been facing challenges with increasing prices and declining sales.
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