BUDGET
2009-10
TAX COMMENTRY ON FINANCE, BILL 2009′
| BUDGET
2009-10 TAX COMMENTRY ON FINANCE, BILL 2009 |
|
MASOOD & MASOOD (CORPORATE & LEGAL CONSULTANTS) June 13, 2009 |
| MOVING PAKISTAN’S TRAIN |
| The point to remember is that what the government gives it must first take away. ~John S. Coleman, address, Detroit Chamber of Commerce, 1956 |
| Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund. ~F.J. Raymond |
| TABLE OF CONTENTS | |
| 2008-09 “YEAR OF CONSOLIDATION”
OR “THE YEAR OF LOST TARGETS” |
Page 3 |
| PAKISTAN ECONOMY’S GROWTH AT A GLANCE. | Page 7 |
| TAX YEAR IN REVIEW. | Page 8 |
| INCOME TAX | Page 9 |
| SALES TAX | Page 13 |
| FEDERAL EXCISE | Page 15 |
| CUSTOMS | Page 17 |
| CAPITAL VALUE TAX
|
Page 19 |
| PETROLEUM PRODUCTS (SURCHARGE) ORDINANCE, 1961
|
Page 19 |
2008-09 “YEAR OF CONSOLIDATION”
OR
“THE YEAR OF LOST TARGETS”
The world economy will contract by 3% this year, far more than the 1.75% drop IMF predicted earlier this year. “Most developing country economies will contract this year and face increasingly bleak prospects,” World Bank president Robert Zoellick has already warned us and we could have used some good news but Pakistan’s Economy has been hit worse. As always current government has held previous government responsible for the economic setbacks. Advisor to Prime Minister on Finance, Shaukat Tarin has labeled financial year 2008-09 as the “Year of consolidation” given Pakistan’s economy was struck with unfriendly domestic and international environment, Pakistan’s economy grew by only 2 percent (shown in figure 1) in the financial year 2008-09 compared with 4.1 percent growth of last year and this year’s target of 4.5 percent.
Figure 1 Real GDP Growth Percentage.
Global recession compounded with microeconomic crisis, trade shock, global recession and domestic security challenges has been blamed as the prime reasons for such decelerating economy. All targets for the year were left for mockery with all sectors performing below average.
Only the Backbone to Pakistan’s economy, the agriculture sector showed some positive trend with a growth of 4.7 percent surpassing budgeted growth of 3.5 percent for the year and compared to a meagre 1.1 percent witnessed last year.
Manufacturing sector was one of the most severely hit sectors and matters were worsened by the energy crisis, his sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year and a target of 6.1 percent expansion. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent as against expansion of 4.0 percent in the last year and 5.5 percent target for the year.
Lack of foreign investment deprived the services sector of its target of 6.1 percent growth, reducing it to only 3.6 percent against last year’s actual growth of 6.6 percent.
Finance and insurance sector observed negative growth of 1.2 percent in 2008-09 that the performance of the sector showed that Pakistan’s financial sector with the advent of foreign banks and financial institutions were integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. Excessive Lending resulted in more defaulters for the financial institutions which worsened the matters more. During 2007-08, the SBP continued with tight monetary policy stance thrice rising the discount rate and increased the cash reserves requirements and statutory liquidity requirements. During July-May 2008-09 money supply (M2) declined 4.59 percent against 8.96 percent last year.
Transport sector and communication sub-sector was also not spared by decelerating Pakistan’s economy depicting a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent of last year.
Although Pakistan’s per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. Per capita income in dollar terms rose by only 4 dollars i.e. from $1042 last year to $1046 in 2008-09, thereby showing a marginal increase of 0.3 percent(Year wise trend shown in Figure 2).
Figure 2 Per Capita Income in Dollar Terms
Compounded with inflation rate rocketing, measured by the changes in Consumer Price Index (CPI) standing at 22.3 percent during July-April 2008-09, as against 10.3 percent in the comparable period of last year, there seems to be no sigh of relief for the common man with 4 dollar per capita income increase. Food inflation is estimated at 26.6 percent and non-food 19.0 percent against 15.0 percent and 6.8 percent in the corresponding period of last year according to the economic survey 2008-09.
The Sensitive Price Indicator has recorded increase of 26.3 percent during July-April 2008-09 against 14.1 percent of last year.
It is expected that the average inflation for the year (2008-09) as measured by CPI is close to a massive 21.0 percent. Although the government expects inflation to come down in single figure in the next couple of years, this seems to be a daunting challenge.
Total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09.
Another depressing sign for Pakistan’s economy were its exports recording a negative growth of 3.0 percent during July-April 2008-09 against the positive growth of 10.2 percent in the corresponding period of last year.
Imports also did not present a blossoming picture with a negative growth of 9.8 percent in July-April 2009,
Workers’ Remittances depicted a positive trend totalling $6355.6 million in July-April 2008-09 as against $5319.1 million in the comparable period of last year, depicting an increase of 19.5 percent.
Fixed investment decreased to 18.1 percent of GDP from 20.4 percent last year adding that private sector investment was decelerating persistently since 2004-05 and its ratio to GDP declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.
Public sector investment to GDP ratio has risen persistently from 4.0 percent in 2002-03 to 5.6 percent in 2006-07. However, it declined to 4.9 percent in 2008-09.
National savings rate has declined to 14.4 percent of GDP in 2008-09 as against 13.5 percent of GDP last year. Domestic savings also declined substantially from 16.3 percent of GDP in 2005-06 to 11.2 percent of GDP in 2008-09.
The overall foreign investment during the first ten months has declined by a staggering 42.7 percent and stood at only $2.2 billion as against $3.9 billion in the comparable period of last year.
Foreign direct investment proved to be a saviour and stood at $3205.4 million during July-April (2008-09) as against $3719.1 million in the corresponding period of last year, thereby showing a decline of 13.8 percent.
Private portfolio investment on the other hand showed a net outflow of $451.5 million as against net flow of $98.9 million during the same period of last year.
Net domestic assets (NDA) was limited to just Rs 442.1 billion as compared to Rs.655.4 billion in the FY 08. During FY 09, the slow expansion in private sector credit has led to slow growth NDA of the banking system. This is shared both by NDA of SBP and Scheduled Banks.
Net foreign assets of the banking system recorded a decline of over Rs.227.1 billion during the first ten months of the current fiscal year to May 9.
Foreign Exchange Reserves amounted $11.6 by the end of May 2009, reserves held by State Bank of Pakistan stood at $8.28 billion and reserves by banks stood at $3.32 billion.
PAKISTAN ECONOMY’S GROWTH AT A GLANCE.
Growth Performance of Components of Gross National Product.
% Growth at a Constant Factor Cost
| Sector | 90’s | 02-03 | 03-04 | 04-05 | 05-06 | 06-07 | 07-08 | 08-09 |
| Commodity Producing Sector | 4.6 | 4.2 | 9.3 | 9.5 | 5.1 | 6.6 | 1.4 | 0.2 |
| 1.Agriculture | 4.4 | 4.1 | 2.4 | 6.5 | 6.3 | 4.1 | 1.1 | 4.7 |
| -Major Crops | 3.5 | 6.8 | 1.7 | 17.7 | -3.9 | 7.7 | -6.4 | 7.7 |
| -Minor Crops | 4.6 | 1.9 | 3.9 | 1.5 | 0.4 | -1 | 10.9 | 3.6 |
| -Livestock | 6.4 | 2.6 | 2.9 | 2.3 | 15.8 | 2.8 | 4.2 | 3.7 |
| -Fishing | 3.6 | 3.4 | 2 | 0.6 | 20.8 | 15.4 | 9.2 | 2.3 |
| -Forestry | -5.2 | 11.1 | -3.2 | -32.4 | -1.1 | -5.1 | -11.5 | -15.7 |
| 2.Mining & Quarrying | 2.7 | 6.6 | 15.6 | 10 | 4.6 | 3.1 | 4.4 | 1.3 |
| 3. Manufacturing | 4.8 | 6.9 | 14 | 15.5 | 8.7 | 8.3 | 4.8 | -3.3 |
| -Large Scale | 3.6 | 7.2 | 18.1 | 19.9 | 8.3 | 8.7 | 4 | -7.7 |
| -Small Scale | 7.8 | 6.3 | -20 | 7.5 | 8.7 | 8.1 | 7.5 | 7.5 |
| 4. Construction | 2.6 | 4 | -10.7 | 18.6 | 10.2 | 24.3 | -3.9 | -10.8 |
| 5. Electricity & Gas Distribution | 7.4 | -11.7 | 56.8 | -5.7 | -26.6 | 4.7 | -22 | -3.7 |
| Services Sector | 4.6 | 5.2 | 5.8 | 8.5 | 6.5 | 7 | 6.6 | 3.6 |
| 6.Transport, Storage and Comm. | 5.1 | 4.3 | 3.5 | 3.4 | 4 | 4.7 | 5.7 | 2.9 |
| 7.Wholesale & Retail Trade | 3.7 | 6 | 8.3 | 12 | -2.4 | 5.8 | 5.3 | 3.1 |
| 8.Finance & Insurance | 5.8 | -1.3 | 9 | 30.8 | 42.9 | 14.9 | 12.9 | -1.2 |
| 9.Ownership of Dwellings | 5.3 | 3.3 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 |
| 10.Public Administration & Defence | 2.8 | 7.7 | 3.2 | 0.6 | 10.1 | 7.1 | 1.2 | 5 |
| 11. Services | 6.5 | 6.2 | 5.4 | 6.6 | 9.9 | 7.9 | 10 | 7.3 |
| 12. GDP (FC) | 4.6 | 4.7 | 7.5 | 9 | 5.8 | 6.8 | 4.1 | 2 |
| 13. GNP (FC) | 4 | 7.5 | 6.4 | 8.7 | 5.6 | 6.7 | 4.1 | 2.6 |
TAX YEAR IN REVIEW
Notwithstanding all uninspiring and half hearted endeavour to reform tax administration and procedures, the tax to GDP ratio fluctuated in a narrow band of 10 to 11 percent for almost one decade. In the current fiscal year there is a potential risk of a tax-to-GDP ratio below 10 percent of GDP for the first time in the last two decades. FBR tax collection remained less than satisfactory and witnessed deceleration in real terms.
Tax Revenue collected by the FBR amounted to Rs.898.6 billion during the first ten months (July-April) of the fiscal year 2008-09, which is 17.7 percent higher than the net collection of Rs.763.6 billion in the corresponding period of last year. The net Direct tax collection was estimated at Rs. 332.5 billion against the target of Rs 496 billion which implies a growth of 16.9 percent during Jul-April 2008-09. Indirect taxes grew by 18.2 percent during Jul-April 2008-09 and accounted for 62 percent of stake in overall tax revenue. The sales tax collections grew by 22.2 percent and stood at Rs.358.9 billion as against Rs.293.6 billion in comparable period last year. The net customs duty collection has inched up from Rs.114.9 billion in 2007-08 to Rs.117.2 billion in 2008-09, thereby showing modest growth of 2.1 percent. The net collection of federal excise stood at Rs 90.0 billion during Jul-April 2008-09 as against Rs. 70.6 billion in the corresponding period of last year, thereby, showing an increase of 27.5 percent.
The total tax exemptions and concessions to various sectors and investors have cost the government Rs 119.646 billion during 2008-09 against Rs 86.657 billion in 2007-2008, reflecting an increase of 38.1 percent.
Increasing the tax net may be the words on the Lips of Advisor to Prime minister, Shaukat Tarin but this lacks soul with no new sector being brought to tax and burden being given to the existing taxpayer. Measures may have been introduced to improve tax net like gaining an NTN for all types of purchases, however, this remains to be seen whether gaining of an NTN would result in increased revenue for the government.
Significant changes being proposed by Finance, Bill, 2009
Income Tax
Taxation for IDPs – Salaried Suffer
- One time IDPs Tax introduced for tax year 2009 @ 5% of tax payable by individuals & AOPs with taxable income of one million or more. One time levy at the rate of 30 percent for tax year 2009 is proposed to be imposed on bonus paid or payable to corporate employees receiving salary income of Rs. 1,000,000 or more excluding such bonus. It has been explained that this one time levy has been imposed to support rehabilitation of internally displaced persons. It may be noted that tax on bonus in such cases shall be imposed as a separate block of income and will not be subject to tax again as part of salary income (i.e. the impact will be of differential in tax rate).
Salaried and AOP’s hit hard
- Employees with salary income of Rs. 500,000 or more required to file return of income and wealth statement with evidence of tax and reconciliation, however, e-filing may be made voluntary
- Individuals & AOPs filing statement under FTR with tax payment of Rs. 20,000 or more to file wealth statement and reconciliation.
- AOP also required to discharge its advance tax obligations even if the taxable income below Rs. 200,000/-.
Senior Citizens, Army, retired and government employees– A sigh of relief
- The Finance Bill proposes to enhance the threshold for senior citizens to Rs. 750,000 from Rs. 500,000/-. Senior citizens earning income below such threshold shall receive 50 % reduction in tax liability.
- Relief allowance of 15% of pay to serving government servants from 1 July 2009.
- Increase in allowance of Armed forces deployed on western front equal to one month’s basic pay from 1 July 2009. Remaining Armed forces would be provided from 1 January 2010 and in interim period, adhoc allowance of 15% of pay to be given.
- Retired government servants and armed forces to get 15% increase in pensions from 1 July 2009.
Full time teacher / researcher tax liability
- 75 percent reduction in tax liability of a full time teacher / researcher in a recognized institution is proposed to be reduced to only 50 percent relief.
Donations – Government wants others to do charity
- Corporate sector induced to charitable donations by increasing threshold for tax credit from 15% to 20%.
Importers, Exporters and Service providers come under knife.
- Importers, Exporters and Service providers who were under final tax regime by virtue of section 148, 154 and 153(1b) will now have to treat their final tax as minimum tax.
- Rate of withholding tax on imports increased from 2% to 4%.
- Indenting commission in respect of export of goods – tax raised from 1 to 5 percent
- Dividend paid by privatized projects of WAPDA – tax raised from 7.5 to 10 percent
Suppliers of cigarette and pharmaceutical along with News print media services rejoice after budget.
- Rate of tax on supply of cigarette and pharmaceutical products by distributors reduced from 3.5 to 1 percent
- News print media services rate reduced from 6 to 2 percent
Non- profit Organizations to keep records
- Non-profit organizations will be required to withhold tax from payments made on account of supply of goods, rendering of or providing of services and execution of contracts.
Fines
- The Finance Bill proposes that a fine of up to Rs. 50,000 when non-compliance with notice of the Commissioner to stop removal of manufactured goods for recovery of tax occurs or Non-filing of annual tax return or statement of final taxation and wealth statement voluntarily by due date occurs
Branches of foreign companies
- The provisions relating to taxation on remittance of profits by branches of foreign companies now amended to provide for this levy on remittance. Petroleum Exploration & Production companies however excluded from taxation on remittance of branch profits.
Dairy Farming / Livestock – Animal’s to be valued at realization basis
- Loss of animals used in business be allowed on realization basis instead of depreciation claim.
Alternate Energy – An Uninspiring Move.
- Along with exemption from income tax under second schedule clause 132, Alternate Energy Projects involved in electric power generation would be entitled for FYA of 90 %. Potential Impact seems Zero.
Vehicles Eligible for depreciation
- Cost of passenger transport vehicles (not plying for hire) for claiming depreciation restricted to Rs. 1.5 million.
Profit on debt – Government encourages construction
- Thresholds improved for Tax credit on profit on debt utilized for construction or acquisition of new house. 40 % enhanced to 50% and ceiling of Rs. 500,000/- raised to Rs. 750,000/-
Manufacturers given incentive to register
- Manufacturers registered under Sales Tax Act encouraged to make sales to sales tax registered person. The Finance Bill seeks to motivate the manufactures registered under the Sales Tax Act, 1990 by allowing a tax credit at 2.5 percent of the tax payable for a tax year. The scheme are shall be applicable given the following:
- 90 percent of sales of the manufacturer are required to be made to the sales tax registered persons;
- Complete details of persons to whom sales were made are required to be provided. Income covered under final tax or minimum tax schemes are not entitled to this tax credit.
- Carry forward of this tax credit will not be allowed
Minimum Tax – Old Practices die Hard
- Minimum tax of one-half percent reintroduced for resident companies and banking companies, however companies sustaining Loss before set off of depreciation and other inadmissible expenses could escape such minimum tax.
Return Filling – Expansion of Tax Net, Will it work?
- The Finance Bill seeks to extend the requirement of filing of return of income for the following persons, who:
(a) Own immovable property with a land area of 500 square yards or more located in rating area;
(b) own a flat having covered area of 2,000 feet or more located in a rating area (c) own a motor vehicle of above 1000CC
(d) Has obtained National Tax Number.
The mandatory requirement of obtaining NTN is also proposed to be extended for purchase of property, obtaining commercial / industrial gas / electricity connections and opening of bank accounts. As such all these would be required to file return of income. Every NTN holder will therefore be obliged to file return of income.
Miscellaneous
- Time period for revision of return extended but taxpayer debarred once notice of amendment issued.
- Limitation period for amendment of assessment extended.
- Order of additional tax passed under section 205 made appealable.
- Commissioner Appeals obliged to pass order within specified time.
- Chairman ITAT empowered to constitute as many Single Benches for certain cases.
- Time limitations to constitute ADRC, recommendations by ADRC and decision on recommendations by the FBR introduced.
- Advance tax basis changed from tax assessed to Tax to Turnover Ratio for latest tax year.
- Companies involved in packing or re-packing process not to be treated as manufacturer.
- Filing requirements of annual statement of withholding taxes rationalized with the tax year of withholding agent.
- Time period for issue of refund order extended.
- Commissioner empowered to withhold refund for unlimited period in certain cases.
- Failure to file return or statement of final tax regime or wealth statement to be considered as offence.
- Scope of provisions pertaining to concealment of income or furnishing of inaccurate particulars extended.
- Additional tax and compensation on delayed refunds determined at KIBOR plus 3%.
- Tax collected from electricity bills exceeding Rs. 30,000 made adjustable for non-corporate users.
- Jurisdiction of income Tax Authorities rationalized.
- Enhanced powers given to board to condone any time limit or call for records. Allowance of provision for NPL for banking companies restricted to one percent of classified advances.
- Slab rates introduced vide Finance Act, 2008 for Small company rate are to be withdrawn.
Sales Tax
KIBOR – the new standard rate
- KIBOR has been defined as the new standard as the levy of default surcharge and the amount to be paid on delayed refunds are proposed to be linked to KIBOR.
- Rate of default surcharge is proposed to be KIBOR + 3 %.
- Rate of amount payable for delayed refund changed from 6% to KIBOR per annum.
Speedy Settlements
- The time period for the issuance of order from 240 days (i.e. 120 days initial, further extendable for additional 120 days) to 180 days (i.e. 120 days initial, further extendable for additional 60 days). However, the period during which any case will remain adjourned on the request of the registered person or due to any other appellate proceedings, will be excluded when calculating the given time limit. This change will help in speedy settlement of assessment proceedings.
Tax Invoices – Broadening the Tax Net
- National Tax Number or Computerized National Identity Card number of unregistered person to be provided on the sales tax invoice.
More records – More Fuss
- Retention of sales tax record from 05 years is proposed to be extended until disposal of pending litigation at any appellate forum.
Rationalization of Appeals and ADRC
- Procedure of appeal by Appellate Tribunal aligned to related provisions of the Customs Act, 1969.
- Time limit for providing expert opinion to Alternate Dispute Resolution Committee [ADRC] enhanced.
- FBR is proposed to be further empowered to dissolve an ADRC and appoint a new one in case the ADRC fail to make it recommendations within the stipulated or extended period.
- FBR to give order on recommendations of ADRC within 45 days is similarly proposed.
Exemptions
- Exemption of sales tax on import and supply of potatoes and onions withdrawn.
- Import and local supply of direct material for assembly or manufacture of tractors, bulldozers and combined harvesters exempted.
- Zero rating of sales tax on import and local supply of wheel chairs for special people.
- Import and local supply of Lysine Sulphate (as raw materials for poultry feed) exempted.
- Exposed and developed cinematographic film exempted.
- Withdrawal of zero rating facility on import and supply of certain items.
- Amount of sales tax on activation of cellular handsets decreased from Rs. 500/- to Rs. 250/-.
Federal Excise
Board Empowered
- It is proposed that any due dates apart from generally prevailing ones shall be notified by the Board instead of Federal government as previously done.
- „ Exemption allowed to banks and NBFCs against certain services.
KIBOR – the new standard rate
- KIBOR has been defined as new standard and the levy of default surcharge and the amount to be paid on delayed refunds are proposed to be linked to KIBOR.
- Rate of default surcharge is proposed to be KIBOR + 3 %.
- Rate of amount payable for delayed refund changed to KIBOR per annum.
More records – More Fuss
- Retention of record from 05 years is proposed to be extended until disposal of pending litigation at any appellate forum.
Telecomm Sector – a mixed approach
- Rate of FED on telecom services is reduced from 21% to 19% in order to reduce the cost of the service.
- SMS services attract levy of FED at 20 paisa per SMS.
FED on banking and stock brokers
- Definition of services extended to include Banking and rate is also being enhanced from 10% to 16%. The collection and payment of such FED will be governed under VAT mode, which means that input tax credit would now be adjustable against the output FED.
- Stockbrokers are also brought to the tax net by levying FED at the rate of 16% of the charges, which shall be payable in VAT mode.
- Insurance services subjected to FED at enhanced rate of 16 percent thus making insurance sector also prone to FED.
Port and terminal operators ‘exercised’
- The services of port and terminal operators have also been subjected to levy of ED at the rate of 16% of the charges, which shall also be collected and paid in VAT mode as banking. However stevedoring service providers escape ED this time.
Tax Invoices – Broadening the Tax Net
- National Tax Number or Computerized National Identity Card number to be included in invoices.
Cigarettes – who will quit, you, the government or the manufacturer
- Rates of FED have been enhanced as follows:
| Cigars, cheroots, cigarillos and cigarettes, of tobacco or tobacco substance | Sixty four percent of retail price |
| Locally produced cigarettes if their retail price exceeds nineteen rupees and fifty paisa per ten cigarettes | Sixty four percent of retail price |
| Locally produced cigarettes if their retail price exceeds ten rupees but does not exceed nineteen rupee and fifty paisa per ten cigarettes. | Four rupees and seventy-five paisa per ten cigarettes plus seventy percent per incremental rupee or part thereof |
| Locally produced cigarettes if their retail price does not exceed ten rupees per ten cigarettes | Four rupees and seventy-five paisa per ten cigarette |
| Cigarettes manufactured by a manufacturer who remains engaged on and after 10th June 1994, either directly or any other arrangement, if the manufacture of any brand of cigarette in non-tariff areas. | Sixty four percent of retail prices |
Rationalization of Appeals and ADRC
- Procedures of admitting, hearing and disposing of appeals synchronized with other indirect taxes.
- FBR empowered to dissolve an ADRC and appointment of new Committee, in case of any failure to make recommendations within the stipulated or extended period.
- FBR required to give order on recommendation of ADRC within specified time.
Motor Cars, Staple Fibre, Umrah and certain banking services- Escape from the inevitable
- Motor cars and other motor vehicles principally designed for the transport of persons including station wagons and racing cars of cylinder capacity exceeding 850 cc.
- Viscose staple fibre
- Services provided or rendered by banking companies and non-banking financial companies in respect of Hajj and Umrah, cheque book, insurance, Musharika and Modaraba financing and utility bill collection.
Customs
KIBOR – the new standard rate
- KIBOR has been defined as new standard and the levy of default surcharge and the amount to be paid on delayed refunds are proposed to be linked to KIBOR.
- Rate of default surcharge is proposed to be KIBOR + 3 %.
More Documents
- Certificate of country of origin’, Vessel Information Report (VIR) and Carrier Declaration Information (CDI) to be included in the definition of Documents thus widening its scope
Precious Metals excluded from smuggling upto Rs. 200,000/-
- The Bill proposes to enhance the value of specified goods from Rs.50,000 to Rs.200,000 for the purpose of exclusion from the ambit of smuggling. Such change is in light of diminishing value of rupee against dollar and other precious metals.
Intellectual Property Rights -Prohibitions to import/Export
- The bill proposes to add an enabling clause to empower customs officers to pursue import export violations especially intellectual property rights.
Confiscated Vehicles – Treat them as your own
- The Board is authorized to allow use of confiscated vehicles may also approve their use for the subordinate offices. Now, it is proposed that the Board will also be able to approve use of confiscated vehicles by the Members of Appellate Tribunal constituted under the laws
More records – More Fuss
- Retention of record from 05 years is proposed to be extended until disposal of pending litigation at any appellate forum.
Exemption / concessions
- Exemption / concessions of custom duty on import on the Following is proposed
- pharmaceutical raw materials,
- life-saving drugs and cancer diagnostics;
- Inputs for manufacturing parts/components for engineering sector;
- Agricultural tractors;
- Fully dedicated CNG buses (CBU)
- Steel tubes for manufacture of CNG cylinders;
- Betain for poultry industry;
- Calf milk replacer;
- Premix of micro nutrients (cattle feed premix);
- Linear alkyl benzene;
- Colostomy bags
- Spin finish oil
- Solar equipments
- Non-survey Based items.
Relief Measures (Reduction in duties)
- Following items’ duties are being reduced to the following as relief measures
- Silicon Sealant 10%
- Cellular Mobile Phones Rs. 250/set
- Motorcycles, etc. falling PCT Heading 87.1 65%
- Non-localized components of motorcycles 15%
- Specified Packing material Reduced by 5%
- Raw materials for manufacturing pre-fabricated steel buildings 5%
- Import of kits for 4-stroke auto-rickshaw 20%
- CRC black plate for manufacture of tin plate 5%
Increase in duties
- Following sectors have come under the knife under the Finance Bill, 2009
- Residue oil 15%
- Hydrogen per oxide 10%
- „ Dinoseb (ISO) acetate 20%
- „ Rolling Coating printing ink 15%
- „ Pigment thickener 10%
- „ Baths, shower-baths, sinks and wash-basins 25%
- „ Lavatory seats and covers 25%
- „ Welded stainless steel pipes 15%
- „ Printed aluminum foil 15%
- „ Wire condensers 10%
- „ Sparking plugs 10%
- „ Multimedia still camera 10%
- „ Indicator panels incorporating LCD or LED 25%
- „ Tufted carpets 15%
- „ Electric conductors for a voltage exceeding 1,000V 25%
- „ Cinematographic film 5% ad.val plus Rs.5 per meter
- „ Additional duty on four localized parts of motorcycles 32.5%
Capital Value Tax
Immovable Property
- The significant enhancement in rate of CVT on transfer of immovable property is proposed to demotivate black money in the economy. The new rates will range from 4% upto 100 rupees per square yards.
- CVT on share trading of listed companied is proposed to be withdrawn.
Petroleum Products (Surcharge) Ordinance, 1961
Carbon Surcharge
- Petroleum Development Levy is likely to be renamed carbon surcharge vide amendments proposed by finance bill, 2009 and such surcharge shall apply on numerous petroleum products including CNG as follows:
High Speed Diesel Oil (HSDO) 8 Rupee per liter
Motor Spirit (MS) 10 Rupee per liter
SKSO 6 Rupee per liter
Light Diesel Oil (LDO) 3 Rupee per liter
HOBC 14 Rupee per liter
Compressed Natural Gas (CNG) 6 Rupee per literal
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