Highlights of Taxation Proposals.
* Universal Self-Assessment scheme applicable to all persons including companies.
* Incentives for Prime Minister's Programme for Economic Revival (Housing Sector).
* Incentives for Prime Minister's Urban Transport Strategy.
* Raising of income threshold for filing Wealth Tax return from Rs.l00,000 to Rs.200,000.
* Exemption from tax with holding to the persons providing services to the manufacturers-cum-exporters.
* Incentives for persons registered under "Sales Tax Turnover Scheme".
* First year allowance @50 per cent to service, infrastructure, social and agriculture sector. Investment in these sectors to be immense from probe by Income Tax Authorities.
* Exemption on vehicles from 5 per cent Income Tax Capital and Value Tax subject to fixed customs duty at import stage.
* Taxation of indirect exporters at par with direct exporters.
* Withholding tax on services rendered by persons other than Doctor's, Lawyers etc., to be treated full and final discharge of tax liability.
* Introduction of Common Tax Payer Identification Number.
* Abolition of CT on immovable assets.
A. RELIEF MEASURES:
* Custom duties are being reduced on some smuggling prone items like photographic prone items like photographic films in rolls, photographic papers in rolls, photographic plates & films, close-circuit T.V. cameras, video cameras, chemicals for photography and optical filters from 15-35 per cent to 10 per cent. As per the Prime Minister's Urban Transport Strategy Plan, 1999, the imp ort of CKD kits for buses, CKD kits for 800 CC cars, CNG buses and diesel chassis in CBU condition and machinery and equipment for local assembly if imported through the P.M.'s Urban Transport Strategy Plan, 1999 are being exempted from customs duty. The 800cc cars in CBR condition shall also be granted exemption of duty provided the local assemblers of 800cc cars give a certificate of M/s SMEDA that their production capacity has to remove discretion of assessing officers and to simplify assessment of customs exhausted and that they have no objection if the 800cc cars in CER condition in specific number are imported under the Prime Minister's Urban Transport Strategy Plan 1999.
* Under the Prime Minister's programme for Economic Revival (Housing Sector) the following plant and machinery is being exempted from customs duty and is valid.
1. Pre-Cast Plant machinery
2. Ready mix concrete manufacturing Plants.
3. Concrete Block manufacturing Plants.
4. Tower Cranes, Batching Plants, Concrete Transit Mixers, Excavators, Mobile Cranes, Concrete Pumps, Loaders, Dump Trucks.
* The rate of duty on minibuses, buses and coaches (PCT 87.02) has been reduced to 25 per cent and val. In addition to this, one bus in CBR condition may be imported by a person under Non Reportable Investment (NRI) Scheme which will be charged only 1 0% customs duty. No other taxes would be levied. This should make the good-quality public transport available at affordable rates
* One-time legitimization of non-duty paid old and used heavy vehicles like trucks, tankers, prime movers, trailers, dumpers tractors and buses is being allowed after charging duty on depreciated value. This Scheme is Valid upto August 31, 1999.
* In order to remove discretion of assessing officers and to simplify assessment of customs duty on import of vehicles, a transparent system of fixed consolidated levy in lieu of custom duty, sales tax, income tax and capital value tax in foreign exchange is being introduced. Revised consolidated duty rates on cars are enclosed.
* Zinc dust for the manufacture of fertilizer is also being exempted from customs duty.
a. Provision of legal framework for goods which are imported by the Federal or provincial government or local bodies out of foreign grants so that they continue to be exempted from customs duty; and
b. The goods which are donated to the Federal Government, Provincial Government and local bodies are being exempted from customs duties.
* Tariff anomalies on import of certain goods are being removed.
* To avoid misdeclarations and classification disputes, rates of duty on similar items falling in different headings are being rationalised.
C. TAXATION MEASURES
* In order to protect the local steel remitting industry, and to mop up the windfall gains due to falling international prices of ships meant for scrap, a duty of Rs.500 PMT is being imposed.
* In order to protect the local oil extraction and expelling units and to mop up the windfall gains due to falling international prices, an additional duty of Rs.2000/ PMT has been imposed on edible oils.
* In order to protect the local industry from cheaper imports, duties are being enhanced on certain goods.
* Provision is being made for payment of customs duty in foreign exchange on dutiable baggage.
D. LEGAL CHANGES
* Some legal provision regarding recovery of arrears, determination of custom value and penal clauses to discourage revenue leakage are being inserted in the Customs Act, 1969.
* Increase in rate of excise duty on cigarettes. The price slab in lower brand increase from Rs.3.71 to Rs.4.25 and the rate from Rs.l.58 to Rs.2.00 per 10 cigarettes. In upper brand, the rate will increase from 63 per cent to 70 per cent of retail price.
* Levy of excise duty on print media advertisement @12.5 per cent as applicable to radio & TV advertisements.
* Levy of central excise duty on credit cards @2 per cent of the amount billed to the users.
* Increase in rates of excise duty on bank cheque from Rs.2 to Rs.4 per cheque.
* Central Excise Duty on courier services. Increase in rate from 12.5 per cent to 15 per cent.
* Reduction of Central Excise Duty on telephone services from 25 per cent to 15 per cent.
* Withdrawal of excise duty on polypropylene bags and sacks.
* Withdrawal of central excise duty on import of refrigerators/deep freezers.
* Rationalization of duty on supply of gas for the manufacture of fertilizer only.
* Rationalization of duty structure on lube oil.
* Withdrawal of facility of deduction of chilling charges from retail price of beverages for the purpose of excise duty.
* Levy of central excise duty on import of certain items to provide protection to the local industry.
A. RELIEF MEASURES FOR SMALL MANUFACTURERS
* Enhancement of exemption threshold from 0.3 million to 0.5 million rupees.
* Raising the threshold for normal sales tax regime from annual turnover of Rs. 1 million to Rs.2.5 million.
Simplified Sales Tax Procedures (SSTP), for manufacturers with turnover below Rs.2.5 million.
FOR SMALL TRADERS
* Small retailers with annual turnover of up to Rs. 1 million to be exempted.
* Retailers with annual turnover between Rs. 1 million and Rs.5 million to pay turnover tax @2 per cent only along with 1 per cent final Income Tax.
* Trade Enrolment Certificate (TEC) Schemes. Income tax incentives shall continue for small manufacturers and traders.
* 1 per cent turnover tax as full and final liability of income tax for persons paying turnover tax.
* No questions asked about previous income tax assessments on the basis of sales tax records (immunity available up to 2001-2002; and
* 1 per cent turnover scheme for weavers/knitters working as vendor on service charge basis, provided that they are registered with Sales Tax Department.
* Cattle feed to be exempted from sales tax to promote livestock and dairy industry.
* Exemption on inputs of Phosphatic fertilizer to provide level playing field to local manufacturers.
* Exemption on inputs of agricultural pesticides to provide level playing field to local manufacturers.
* No exemption at import stages on plant and machinery manufactured locally, to encourage domestic engineering and electronic industry.
* Exemption on Bricks and Cement blocks used in the construction of homes under Prime Minister's Housing Programme.
* New registrants shall be entitled to claim input tax credit on stocks of tax-paid goods available on the date of registration.
* Amnesty from 80 per cent of the additional tax and penalty and also from prosecution to persons who pay principal amount of tax and 20 per cent of the additional tax and penalty by 28th June 1999.
B. TAXATION MEASURES:
* Exemption of sales tax on imported Cars, which shall pay consolidated customs duty in foreign currency.
* Extension of Sales Tax Ac to the Northern Areas and Tribal Areas to eliminate discrimination faced by importers, manufacturers and traders in tariff area.