On 11 June 2019, the Finance Minister has presented the budget for the financial year (FY)2019/2020 to the parliament. The finance minister said that the total federal revenue was estimated at Rp6.717 trillion, 19% more than the previous year’s revenue of R $ 5.661 trillion.
The budget includes the following income tax-related proposals:
Individual taxation:
- Increased the taxable income threshold to INR 600,000 for salaried persons and introduced 11 progressive rate brackets of 5% to 35%, and maintain the taxable income threshold at INR 400,000 for non-salaried persons and introduce 8 progressive rate brackets of 5% to 35%;
- The definition of resident will be amended to include an individual present in Pakistan for a period or total periods of 90 days or more in the tax year and who, in the 4 years preceding the tax year, has been in Pakistan for a period or total periods of 365 days or more.
Corporate taxation:
- The corporate tax rate has now been set at 29% for two years instead of 1% a year as currently planned.
- The tax credit for the harmonizing, modernization and replacement of plant and machinery, which was extended until tax year 2021, will be reduced from 10% to 5% and will subsequently be abolished from 30 June 2019. However, industrial undertakings that have already claimed this tax credit but could not fully adjust the credit against tax payable will still be entitled to carry forward the unabsorbed available credit of prior years.
- Introduced a 15% withholding tax on royalty payments to resident persons;
- the dividends tax rate increased from 15% to 25% for dividends received from companies that are either exempt or don’t pay any tax because of tax credits and allowances available to them; and
- Tax capital gains on immovable property under the normal tax regime at normal tax rates, subject to certain conditions.
