The Budget for the fiscal year 2015/16 (tax year 2016) was presented on 5 June 2015. The Budget proposals will basically take effect from 1 July.

The proposed measures are summarized below:

Corporate Tax:

  • The corporate income tax rate is to be reduced to 32% from 33%.
  • Profits and gains derived from transmission line projects are to be exempted for a period of 10 years, provided that the project is set up by 30 June 2018.
  • The tax credit available to companies for listing on the stock exchange is to be increased to 20% from 15%.
  • The capital gains tax (CGT) rate for securities held up to 1 year and for securities held for a period between 1 and 2 years is to be increased to 15% from 12.5% and to 12.5% from 10%, respectively.
  • An adjustable advance income tax at a rate of 0.6% on transaction amounts is to be levied on all banking instruments and other modes of transfer of funds through banks, for non-compliant taxpayers.
  • The tax rate on dividend income for compliant taxpayers and non-compliant taxpayers is to be increased to 12.5% from 10% and to 17.5% from 15%, respectively.
  • An adjustable advance income tax at a rate of 0.1% is to be levied on all future contract sales and purchase transactions.
  • A final withholding tax at a rate of 10% is to be levied on renting out machinery and for the use of, or right to use, commercial, scientific, or industrial equipment for resident taxpayers.

Individual Tax:

  • The limit for investments made by individuals in shares offered by public companies listed on a stock exchange is to be increased to PKR 1.5 million from PKR 1 million.
  • The rate of tax applicable to salaried individual taxpayers earning taxable income in the range of PKR 400,000 to PKR 500,000 is to be reduced to 2% from 5%.
  • The rate of tax applicable to non-salaried individual taxpayers and associations of persons earning taxable income in the range of PKR 400,000 to PKR 500,000 is to be reduced to 7% from 10%.

Other Taxes:

  • The federal excise duty (FED) rate on cigarettes is to be increased to 63% from 58%.
  • The sales tax levied on various categories of imported mobile phones is to be increased to PKR 300, 500, and 1000 from PKR 150, 250, and 500, respectively.
  • The customs duty levied on the import of dump trucks, super-swinger truck conveyors, mobile canal-lining equipment, transit miners, concrete-placing trucks and truck-mounted cranes is to be reduced to 20% from 30%.
  • The customs duty and sales tax levied on various items in the aviation sector is to be exempted.