The government has imposed new taxes of Rs115 billion even before the mini-budget as it has increased the rate of general sales tax from 17% to 18% and raised the federal excise duty (FED) on cigarettes with immediate effect, reported 24NewsHD TV channel on Wednesday.
The government expects to collect Rs55 billion with 1% increase in the GST and anticipates another Rs60 billion after raising FED on cigarettes.
The federal cabinet on Tuesday night gave approval to increase the GST, and the FED on cigarettes to generate Rs115 billion out of planned Rs170 billion mini-budget.
According to finance ministry officials, the federal cabinet is authorized to raise the rate of general sales tax.
The government has imposed fixed rate duty on locally manufactured cigarettes.
A notification in this regard has been issued by the Federal Board of Revenue.
As per the notification, the government has slapped Rs16,500 Federal Excise Duty (FED) on A category cigarettes.
Rs5,050 excise duty has been levied on B category cigarettes.
The duty will be imposed if the retail price of a pack of 1,000 cigarettes exceeds Rs9,000.
However, if the retail price of a pack of 1,000 cigarettes is less than Rs9,000, the excise duty still to be imposed.
According to the notification, the fixed rate duty on cigarettes will be levied per 1,000 cigarettes pack.
In other words, the government has increased FED on expensive brands from Rs6.5 per cigarette to Rs16.5 – an increase of 153%. For less expensive brands, per stick increase is from Rs2.55 to Rs5.05 – an increase of 98%.
The FBR issued the notification after the cabinet approved the finance bill yesterday which would now be presented in the parliament today (Wednesday) for approval.
President Arif Alvi on Tuesday refused to sign the Finance Amendment Ordinance and advised Finance Minister Ishaq Dar to get it approved by the parliament.
The finance bill will be presented before the both houses of parliament separately today for approval. Then it will be forwarded to the standing committees of both the houses which are expected to approve it by Thursday.
Reporter Waqas Azeem
Reporter Waqas Azeem