Finance Minister Muhammad Aurangzeb has unveiled his first federal budget, presenting a comprehensive outlay of Rs18.9 trillion for the fiscal year 2024-25. The budget includes significant tax hikes on various goods, including petroleum products, cigarettes, and branded clothing and shoes.
Major Tax Reforms and Revenue Projections
The Federal Board of Revenue (FBR) aims to collect Rs12,970 billion in taxes, marking a 38% increase from the current fiscal year. This ambitious target is supported by several new tax measures and increased rates.
Crackdown on Illicit Cigarette Factories
To combat the sale of counterfeit cigarettes, the federal government plans to seal illicit factories. Additionally, a new tax of Rs44,000 will be imposed on materials used in cigarette filter production. This move aims to curb the production and sale of unauthorized cigarettes.
Property and Vehicle Tax Adjustments
A 5% tax will now be levied on the acquisition of new plots, residential, and commercial properties. In a notable shift, advance tax on vehicle registration will be based on the vehicle’s price rather than its engine capacity. This change is expected to more accurately reflect the market value of vehicles.
Increased GST on Branded Apparel and Shoes
To bolster the Goods and Services Tax (GST) on textile products, the government has introduced an 18% sales tax on branded shoes and apparel. This measure aims to increase revenue from the high-demand fashion sector.
Hike in Withholding Tax for Non-Filer Retailers and Wholesalers
The advance withholding tax for non-filer retailers and wholesalers will increase from 1% to 2.25%. This hike is part of the government’s efforts to encourage tax compliance and increase revenue from the retail sector.
Petroleum Levy Increase
The budget includes a significant hike in the petroleum levy:
- Rs20 increase on petrol and diesel
- Rs25 increase on superior kerosene oil, light diesel, and high-octane, e-10 gasoline
These increases are intended to boost government revenue from the energy sector and help manage fiscal deficits.
The 2024-25 budget, presented by Finance Minister Muhammad Aurangzeb, introduces a series of tax hikes aimed at increasing government revenue. Key sectors affected include petroleum, tobacco, real estate, vehicles, and branded goods. The government anticipates these measures will help achieve a substantial increase in tax collection, supporting the country’s economic growth and stability.
