Karachi, May 31, 2012 (PPI-OT): The government has decided to bring tax reforms in the FY13 budget where it intends to abolish Federal Excise Duty (FED) on several items like cosmetics, filter rods, lubricating oil in packs, base lube oil, lubricating oil made from reclaimed oil, lubricating oil in bulk, lubricating oil produced from sludge and lubricating oil from sediment.
According to Alfalah Securities Limited, it also intends to raise FED on international air travelling (club, business and first class).
After the proposed abolition of FED, cosmetic products would only be subjected to general sales tax on the basis of its printed retail price. The government has also decided to completely abolish FED on filter rods, which was fixed at 20% of additional value in Budget FY12 instead of PkRs 1 per filter rod set earlier, thus giving major relief to major cigarette manufacturers like “Pakistan Tobacco” and “Phillip Morris Pakistan”.
Federal Board of Revenue’s (FBR) decision to abolish FED on five kinds of oils is likely to provide major relief to consumers and the business community although it would cause a significant revenue loss to the government. As the government intends to phase out FED on commodities completely in future, FBR had abolished FED on 15 items in the previous budget therefore reducing it from 46 items to 31 items in FY12 and would further be reduced to 21 items in FY13.
On the other hand, the government is expected to increase FED on international air travelling (club, business and first classes) from the existing rate of PkRs 4,340 per ticket (for Saar, Middle East/Saudi Arabia) and PkRs 5,840 per ticket (for Europe, USA, and Far East/China etc) to a standardized rate of PkRs 6,840 per ticket for all countries.