ISLAMABAD - The Pakistan Muslim League-Nawaz (PML-N) government has introduced taxation measures worth Rs120 billion in the annual budget to achieve the mammoth tax collection target of Rs4,013 billion in the next financial year 2017-18.

The federal government has proposed tax collection target for the Federal Board of Revenue (FBR) at Rs4,013 billion for the next financial year as against the revised target of Rs3,521 billion of the outgoing fiscal year with growth of 12.1 percent.

The government has introduced massive taxation measures worth of Rs120 billion and gave taxation relief of only Rs32 billion for the upcoming year.

The government has taken additional revenues generation measures of Rs47 billion in income taxes and Rs52 billion in general sales tax and Rs1.5 billion in customs duty. The government has enhanced withholding taxes on non-filers, which would generate Rs8.25 billion.

The government has increased the regulatory duty on 565 non-essential items by various rate ranging from 5 percent to 15 percent. The items included electronics, food, beverages, cosmetics, chocolates and footwear.

The government has also enhanced custom duty of nine percent on the telecom equipment. Meanwhile, regulatory duty on betel nuts has been increased from 10% to 25% while Rs200 per kg has been levied on betel leaves. Concession in duty/taxes on hybrid electric vehicles above 2500cc has been withdrawn.

Rates for the dividend paid by mutual funds are also proposed to be enhanced from existing 10% to 12.5% in line with the increase in general dividend. Rates for the dividend paid by mutual funds are also proposed to be enhanced from existing 10% to 12.5% in line with the increase in general dividend. Interest income is subject to progressive rates of 10%, 12.5% and 15% for interest income up to Rs. 25 million, between Rs 25 million and Rs.50 million and above Rs50 million respectively. It has proposed to maintain the existing rates but the slabs on which they are to be made applicable are proposed to be changed to up to Rs5 million, between Rs5 to Rs 25 million and above Rs25 million respectively. This will increase the progressivity of the taxation of interest income and make the taxation more equitable.

The steel sector will be taxed at 10.5% compared to the current 9%. The government has also announced to increase federal excise duty on cement from Rs1 per kilogramme to Rs1.25 per kg.

The government has extended the super tax on the income of the affluent and rich individuals, an association of persons and companies earning income above Rs500 million at a rate of 4% of income for banking companies and 3% of income for all others for another one year.

In order to encourage compliant taxpayers, withholding tax on registration of motor vehicles is proposed to be reduced from Rs10,000 to Rs7,500 for engine capacity up to 850cc, from Rs 20,000 to Rs 15,000 for engine capacity between 851cc to 1,000cc and from Rs 30,000 to Rs 25,000 for engine capacity between 1001cc to 1,300cc. The rates for non-filers will remain unchanged