Federal budget — what items will become more expensive?

ISLAMABAD: The National Assembly has approved the federal budget for the next fiscal year 2024-25, set to take effect from July 1.

According to the budget, 10 per cent sales tax has been imposed on animal feed and other solid residues, including soybeans, juices, poultry feed, cattle feed, and sunflower seed feed.

Similarly, an 18 per cent sales tax has been imposed on imported mobile phones worth less than $500, while a 25 per cent sales tax will apply to those worth more than $500.

Additionally, an 18 per cent sales tax has been imposed on the import of mobile phone parts and locally manufactured mobile phones. The sales tax on registered firms manufacturing lead batteries has been increased from 75 per cent to 80 per cent.

For registered firms, an 80 per cent sales tax will be imposed on the supply of gypsum used in cement manufacturing, as well as on the supply of coal, paperboard, and waste paper.

The same 80 per cent sales tax has also been imposed on the supply of plastic waste and crushed stone. The tax exemption on herbal and homeopathic medicines has been abolished.

Sales tax will now be levied on all homeopathic syrups and creams, including those for cold and cough, herbal poultices, jams, suppositories, various herbal syrups, tablets, and hundreds of homeopathic medicines.

A provision to increase the tax rate on international air travel tickets has also been approved. A tax of Rs12,500 will be levied on economy and economy plus tickets for international travel.

The tax on business class and club class tickets for travel to America and Canada has been increased to Rs100,000. A tax of Rs350,000 will apply to business, club, and first-class tickets for travel to America, and a tax of Rs150,000 for business, first, and club class travel to the Middle East and Africa.

Similarly, a tax of Rs210,000 will be levied on business, first, and club class travel to Europe, Australia, and New Zealand.

Tax fraud and tax evasion will result in fines and imprisonment for up to 10 years. Tax evaders will be fined Rs25,000 or an amount equivalent to the evaded tax.

Tax evasion or fraud up to Rs500 million will be punishable by up to five years of imprisonment, while tax fraud or theft of Rs1 billion or more will result in a 10-year prison sentence.

The tax would increase to 18 per cent on textile and leather products as well as a hike in the tax on capital gains from real estate.

In the Finance Amendment Bill 2024, the sales tax exemption on stationery has been abolished. A 10 per cent sales tax has been proposed on stationery items, including sets of colour pencils of different brands and types, as well as pen ink. Additionally, a 20 per cent sales tax has been approved on erasers, pencils, and sharpeners, while a 10 per cent sales tax on pens, ball pens, and markers.

Sales tax exemptions will be granted on the import of parts for solar panels. This includes exemptions on the back sheet film, connectors, corner blocks, polythene compounds, plate sheets, parts of solar inverters, and lithium battery components.

For the first time, a federal excise duty (FED) will be imposed on real estate property sales. A 3 per cent FED will apply to any launched product by builders and developers, and on the sale of commercial plots. Sellers who are filers will pay a 5 per cent FED, while non-filers will pay a 7 per cent FED.

A capital value tax of Rs0.5 million has been imposed on farmhouses and large houses under Section Seven E in Islamabad. Specifically, this tax applies to farms and houses ranging from 2,000 to 4,000 yards at the time of sale. For farmhouses and houses over 4,000 yards in Islamabad, a capital value tax of Rs1 million will be levied at the time of sale.

Additionally, a 15 per cent tax will be levied on the income of builders and developers under Section Seven F in the budget.