Mini Budget 2023 Pakistan presented on 15th February 2023 imposing new taxes and increase in existing tax rates through Finance Supplementary Bill 2023
Consequent to the discussions with the IMF regarding the ninth review of an IMF Extended Fund Facility, the Finance Supplementary Bill 2023 has been presented in the parliament and announced by the Finance Minister in the mini-budget 2023 Pakistan on 15th of February 2023 introducing various amendments in the tax laws to increase tax revenue in order to achieve an additional target of about 170 Billion Rupees in the current fiscal year. The purpose is to convince the IMF to reschedule the loans in order to stabilize the foreign exchange reserves and balance of payments as all major imports of the country are already at a halt due to a lack of foreign exchange with the central bank of Pakistan that has dropped to the dead level of about 3 Billions US Dollars. Only LCs relating to Food, Medicines, and Oil are being matured and all other goods including important raw materials of the industry are lying dumped at the ports causing the industry to verge of collapse due to being incapable of meeting the running costs.
The impact of Finance Supplementary Bill 2023 will further enhance the inflation which is already at a very high level and remained at 27.6% in January 2023 boosting miseries of the low-paid families throughout the country. Significant amendments made in the tax laws are as under:-
Amendments in the Sales Tax Act 1992
The rate of General Sales Tax has been increased to 18% from the existing rate of 17% on all taxable goods as described in the Sales Tax Act 1992 with immediate effect through notification SRO 179(1)/2023 dated 14th Feb 2023.
Amendments in the Income Tax Ordinance 2001
Capital Gain on Securities (Section 37 and 37A)
Amendment in Section 37 of the Income Tax Ordinance 2001 has been made by insertion of new subsections announced in the Mini-Budget 2023 Pakistan by which an advance tax of 10% has been introduced on the acquisition of shares of companies other than the public limited companies that are listed on the stock exchange. The person making payment on acquiring the shares shall be liable to deduct the tax @ 10% on the gross amount paid on the basis of the fair market value of the shares and deposit it to the Government treasury within 15 days. The person disposing of the shares shall be liable to report the detail of the transaction on the prescribed form to the commissioner within 30 days of the disposal of the shares. This amendment shall be applicable to the shares of Private Limited Companies and Un-Listed Public Companies. This tax shall be adjustable.
A new provision has been added in the section 37A by which the trading of securities/shares that are not listed on the stock exchange or which are not settled through the NCCPL shall be dealt with in the amended section 37, which means that advance tax @ 10% shall be applicable on the disposal of such securities.
Advance Tax on Functions and Gatherings (Section 236CB)
A new section 236CB has been inserted through the Finance Supplementary Bill 2023 by which advance tax @ 10% has been imposed on the functions and gatherings which include any weddings, seminars, workshops, sessions, exhibitions, concerts, shows, parties, or any other gathering held at a marriage hall, marquee, hotel, restaurant, commercial lawn, club, community place or any such place used for the purpose. The advance tax @ 10% shall be collected by the management of the venue where the such gathering is held on the total amount of bill for such services. This advance tax under this section shall also be applicable to the food or any other services provided by the service provider. The advance tax collected under this section shall be adjustable.
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