FY25 BUDGET PAKISTAN: DETAILED BREAKDOWN

The proposed FY25 budget includes several measures impacting various sectors, each with its anticipated effects and commentary:

Autos

1. Advance Tax on Vehicle Purchase/Transfer:
   • Proposal: 10% advance tax on purchase/transfer of goods and passenger transport vehicles.
   • Impact: Negative
   • Comment: Could dampen auto sales but boost government revenue.
2. Annual Advance Tax on Vehicles Over 2000cc:
   • Proposal: Increase tax to Rs. 500,000 for non-filers and raise advance tax on vehicle purchase to 24%.
   • Impact: Negative
   • Comment: Could affect sales of larger vehicles (e.g., INDU, KIA, HYUNDAI).

Banking

1. Advance Tax on Foreign Payments by Non-Filers via Credit Cards:
   • Proposal: Increase to 20%.
   • Impact: Positive
   • Comment: Discourages foreign spending by non-filers, broadening tax base and increasing revenue.
2. Abolishment of Advance Tax on Foreign Payments by Filers via Credit Cards:
   • Proposal: Abolish.
   • Impact: Negative
   • Comment: Encourages foreign spending through international credit transactions.

Economy

1. WHT on Cash Withdrawals:
   • Proposal: Raise WHT from 0.6% to 0.9% for non-filers.
   • Impact: Positive
   • Comment: Enhances government revenue and reduces cash transactions.
2. Tax on Agriculture Income and Service Providers:
   • Proposal: Implement tax.
   • Impact: Positive
   • Comment: Diversifies revenue sources and increases fiscal capacity.
3. Advance Income Tax on Electricity Bills for Non-Filers:
   • Proposal: Increase to 30%.
   • Impact: Negative
   • Comment: Burdens industries with higher operational costs, affecting profitability.
4. Advance Income Tax on Large Electricity Bills:
   • Proposal: Increase to 20% for bills exceeding Rs. 200,000 monthly.
   • Impact: Positive
   • Comment: Encourages tax compliance and boosts revenues.
5. Extra Sales Tax on Retail and Marginal Sales:
   • Proposal: Increase to 25% and 30% respectively for sales above Rs. 100,000 and Rs. 200,000.
   • Impact: Neutral
   • Comment: May increase fiscal capacity but pose implementation challenges.
6. Advance Income Tax on Gas Bills for Non-Filers:
   • Proposal: Implement 20% tax.
   • Impact: Negative
   • Comment: Increases operational costs for industries, affecting profitability.
7. Advance Income Tax on IT Business Clients:
   • Proposal: Implement instead of FED (75K-250K based on routes).
   • Impact: Positive
   • Comment: Discourages foreign spending and increases domestic spending.
8. GST on Petrol and Diesel:
   • Proposal: 18% GST.
   • Impact: Negative
   • Comment: May reduce sales and increase inflation, creating tough economic conditions.

Import Oriented Sectors

1. Advance Income Tax on Machinery Import:
   • Proposal: Increase by 1%.
   • Impact: Neutral
   • Comment: Slight impact on import costs.
2. Advance Income Tax on Raw Material Imports:
   • Proposal: Increase by 0.5% for undertakings and 1% for commercial importers.
   • Impact: Negative
   • Comment: Raises costs for importers, reducing competitiveness.

Pharmaceuticals

1. General Sales Tax on Medicines:
   • Proposal: Implement 10-18% GST.
   • Impact: Negative
   • Comment: May decrease pharmaceutical sales due to higher prices.

Real Estate

1. WHT on Immovable Property:
   • Proposal: 0.5% on value assessed by FBR.
   • Impact: Positive
   • Comment: Increases tax revenue and discourages investment in unproductive sectors.
2. Exemption from CGT on Immovable Property:
   • Proposal: Exempt for property held 4-6 years, with declaration at acquisition.
   • Impact: Negative
   • Comment: May reduce government revenue.
3. Advance Tax on Sales of Immovable Property Above Rs. 450k:
   • Proposal: Increase tax to 10.5%.
   • Impact: Positive
   • Comment: Boosts tax revenue and discourages investment in unproductive sectors.

Steel

1. Abolish 4% Further Tax on Sales to Non-Registered Persons:
   • Proposal: Abolish.
   • Impact: Positive
   • Comment: Simplifies compliance and supports steel companies’ profitability.