Budgeting on hope

If ever voice mattered, it was now. The budget unveiled today shows the government heard everything that was being said about it and has moved to rectify, albeit the moves are small. Salaried people have been extended some relief, but mostly for upper slabs. The infamous “deemed income” on capital assets (immoveable property) has been scrapped. The other bug bear of the elites, the so-called “Super Tax” has been abolished for firms with income up to Rs500 million and for those earning above this threshold the rate has been reduced from 10 per cent to 8pc, excluding banks, E&P and fertiliser sector. Advance taxes on real estate transactions have been reduced from 2.75pc to 1.5pc, supposedly to encourage documentation of these transactions. The Capital Value Tax (CVT) on foreign movable and immovable assets of resident Pakistanis has also been abolished. These measures were lightning rods throughout the tenure of this government and the fact that they have moved on them shows they are responsive, even if much ground remains to be covered. What is puzzling though is trying to figure out how they intend to squeeze and additional Rs 2.281 trillion FBR tax revenue for FY27. There are revenue measures for sure, like a withholding tax on digital content creators and social media influencers, new FED imposition and increased duties on e-liquids and various additives for fuels as well as luxury electric vehicles. There is a sweeping change in sales tax to broaden the base. The definition of a “Tier 1 retailer” has been expanded, banks and other electronic money transfers companies will be required to report high-value transactions, penalty rates on non-filers will now also apply to capital gains made from trading stocks of listed companies (which did not used to be the case) and companies will be required to file machine-readable financial statements. As an aside, it would be helpful for the government to live up to this commitment itself as well, and make its data releases m