Budget Commentary Essay

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Azal Ahsan Qadir Budget Commentary 21st June 2015 The federal budget of a country aims to balance expenditures between various expenses in the upcoming year. Its aim in 2015-2016 like every year was to to pursue sound and equitable economic policies that put Pakistan on the path of sustained economic development and macroeconomic stability. Budget ’16 has a clear focal point on reinvigorating increment after two years of economic consolidation . Fiscal incentives for businesses of Pakistan including tax incentives for new industrial units have been announced. This is in parallel with concrete steps for increasing the tax net. Benefit of the reduction in the corporate tax rate by 1% was widely expected and has likely already been priced in while the implementation of a one-time levy at 4% of income for banks and 3 % for all others will be a slight negative. At present Customs duty, Sales Tax and withholding tax on import of agricultural machinery in aggregate ranges from 28% to 43%. Customs Duty, Sales Tax and Withholding Income Tax are being cumulatively reduced to 9%.Taking a deep look with respect to Karachi Stock Exchange, increase in capital gain tax (CGT) by 2 .5 % to 15% was widely expected but the government decided against it. At the same time, increase in tax on dividend by 2.5% for both filer (12.5%) and non-filer (17.5%) has surprised and might be slightly negative. Federal Budget also brings positive signs for the real estate sector of Pakistan. With relief measures for developers and builders as well as reduction in taxes for people engaging in real estate investment trusts (REITs). An enhancement of rates of Federal Excise Duty on locally produced cigarettes has been levied. Also average tax incidence is set to increase from 58% to 63%”The markup on housing loans obtained by individuals for construction or buying of a house can now be deducted up

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