On Friday, 26th May 2017 the federal government introduced the fifth budget of the PML-N government. The budget for the next fiscal year was announced by Finance Minister Ishaq Dar with an outlay of Rs4.778 trillion.
Here are the salient features of the Budget 2017 relevant to the Information and Communications Technology industry:
- In order to promote mobile phone density, the rate of withholding income tax for mobile phone subscriber has been reduced to 12.5% from 14%.
- In order to promote innovation and entrepreneurship in Information Technology and to incentivize the start-ups, tax exemption is being given to start-ups for a period of three years. Moreover, they have been granted exemption from levy of minimum tax as well as withholding tax (as recipient).
- In order to promote digital payments in the country and to assist in the realization of the long term vision of Universal Financial Inclusion in Pakistan, exemption is being accorded to branch-less banking agents operating under the Asaan Mobile Account Scheme from withholding tax on cash withdrawals made for the purpose of making payments to their respective customers. At present, tax @ 0.3% and 0.6% is deducted upon aggregate cash withdrawals exceeding Rs.50000 per day from filers and non-filers respectively.
- Mobile phones previously were chargeable to sales tax at the rates of Rs. 300, Rs. 1,000 and Rs. 1,500 per mobile phone set depending upon categories of mobile phones. It is proposed to merge sales tax rates of Rs. 300 and Rs. 1,000 per set into Rs. 650 per set.
- Exemption from sales tax is also proposed to be provided on export of IT services.
- Federal Excise Duty on telecommunication services is proposed to be reduced from 18.5% to 17%.
- CD @ Rs. 250 per set converted into RD @ Rs. 250 per set on mobile phones. CD @ 11% and 16% exempted and instead RD at uniform rate of 9% levied on the telecom equipment
- Higher Education Commission (HEC) will be getting Rs. 35 billion from the federal budget
Additionally, the following announcements have also been made: Rs. 121 billion has been allocated from the budget for the Benazir Income Support Income (BISP), whereas Rs. 20 billion has been allotted to the Prime Minister Laptop Scheme.
A budget of 180 billion rupees has been announced for China Pakistan Economic Corridor and the different projects happening at Gwadar that are to start on July 1st during the 2017-18 financial years.