Income of all political parties exempted

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The government has announced exemption on income of all political parties registered with the Election Commission of Pakistan (ECP) and tax neutrality in Islamic Banking viz-a-viz conventional banking.

According to the Finance Bill 2017, at present there is no specific exemption in the law in respect of income of political parties. As a relief measure, exemption is now being proposed on income of all political parties registered with the Election Commission of Pakistan under the Political Parties Order, 2002.

In order to encourage non-profit/charitable institutions ,income of the following charitable organisation/non- profit organisations is proposed to be exempted including (a) Gulab Devi Chest Hospital (b) Pakistan Poverty Alleviation Fund and (c) National Academy of Performing Arts.

At present Hajj group operators are paying Rs 5000 per pilgrim in respect of income from Hajj operations. In order to facilitate Hajj Group operators the fixed tax of Rs 5000 per pilgrim is being extended for the Tax Year 2017. In order to promote and incentivise Islamic banking, special provisions have been introduced whereby tax neutrality has been accorded in the case of Musharika financing by extending the benefit of depreciation on assets owned in the case of a Musharika arrangement.

At present, advance tax @ 3% is collected at the time of leasing motor vehicles to a non-filer. In order to facilitate the generation of employment opportunities among the unemployed youth and to mitigate their hardships, exemption from collection of advance tax is being accorded to vehicles leased under the Prime Minister’s Youth Loan Scheme.

In order to promote industrialisation and manufacturing the quantitative limit for import of raw materials by industrial undertaking, without collection of income tax at the import stage, on the basis of exemption certificate issued by the Commissioner, is being enhanced from 110% to 125% of the quantity imported and consumed in the previous tax year.

At present an individual is obliged to pay advance tax if his latest assessed taxable income is Rs 500,000 or more. In order to provide relief and to facilitate small taxpayers, the threshold for payment of advance tax on the basis of latest assessed taxable income is being enhanced from Rs 500,000 to Rs 1,000,000. A present interest-free loan exceeding Rs 0.5 million provided by an employer to an employee is treated as a perquisite and is subjected to tax in the hands of the employee. In order to provide relief to such employees it is proposed to enhance this limit of interest free loans from the existing 0.5 million to Rs 1 million. To further improve the performance of the stock exchange it is being subjected to reduced rate of minimum tax @ 2% on its services.

The present rate of tax of 12.5 % on dividend income is on the lower side as compared to most other countries in the region. It is proposed that the rate be increase to 15%. Furthermore, rate of tax on dividend received from mutual funds is being rationalized and enhanced from existing 10% to 12.5%.

At present there are three slabs for taxation of interest income for persons earning interest income up to Rs 25 Million, from 25 Million to 50 Million and in excess of Rs 50 million. In order to rationalize taxation of interest income and to reduce the incidence of tax upon persons earning lesser interest income where markup does not exceed Rs 5 million, the proposed rate is 10 percent, where mark-up exceeds Rs 5 million but does not exceed Rs 25 million, the imposed rate is 12.5 percent and where mark-up exceeds Rs 25 million, the rate is 15 percent.-Business Recorder

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