Tax Changes in the Budget for Fiscal Year 2081/82
May 29, 2024 | Investopaper
The government has set a target to collect Rs. 1.422 trillion in revenue for the upcoming fiscal year 2081/82, making several adjustments to tax rates on various goods and services. The adjustments were announced through the ‘Finance Bill 2081’ tabled in the Federal Parliament on Tuesday.
One of the significant changes in the Finance Bill involves increasing customs and excise duties on electric vehicles (EVs). Previously, there was no excise duty, and the customs duty was 10 percent. Now, EVs up to 50 kW will face a 15 percent customs duty and a 5 percent excise duty. For EVs between 51 to 100 kW, both duties have been increased by 5 percent each, raising customs duty to 20 percent and excise duty to 10 percent. EVs with power ranging from 101 to 200 kW will now incur 30 percent customs duty and 20 percent excise duty, up from the previous 20 percent and 10 percent, respectively. For those between 201 to 300 kW, customs duty is up by 20 percent, while excise duty has decreased by 10 percent. Vehicles over 300 kW will also see a 20 percent increase in customs duty and a 10 percent reduction in excise duty.
Additionally, for the first time, a green tax has been introduced. A maximum of 1 percent green tax will be levied on imported items like coal, stone coal, and petroleum oil. The Finance Bill also eliminates several fees and duties, including the customs service fee of Rs. 100 for exports and Rs. 500 for imports, and the agricultural reform fee. The foreign tourism package, which now clearly includes transportation, meals, sightseeing, and entertainment, is also updated under the foreign tourism fee category.
Import duties on raw materials for industries will now be at least one tier lower than those for finished goods. This change affects sectors such as pharmaceuticals, induction stoves, thread, helmets, incense sticks, sanitary pads, cashew and peanut processing, and spring leaf production, all of which will see a reduction in import duties and excise duties on raw materials.
The bill also exempts value-added tax (VAT) on basic agricultural products such as potatoes, onions, apples, and garlic, while increasing excise duties on alcohol, beer, tobacco, and cigarettes. For various imported items, the agricultural reform fee at the customs point has been increased from 5 percent to 9 percent. This includes items like Pacific salmon, sole, skipjack tuna, dogfish, and other sharks, as well as albacore and longfin tuna.
Export duties have also been adjusted. The duty on split red lentils has been removed, while items like polypropylene, polyisobutylene, and propylene copolymers will now incur an export duty of Rs. 5 per kilogram. The duty on coniferous and non-coniferous wood has been reduced from 200 percent to 50 percent, benefiting woods such as pine, cedar, birch, and creeping fig.
Previously, men could import up to 25 grams and women up to 50 grams of gold jewelry without paying customs duty. Now, beyond these limits, an additional 50 grams of gold can be imported by paying customs duties, a reduction from the previous limit of 150 grams at 3 percent customs duty.
There are also changes in temporary importation fees. LPG gas transportation bullet trucks will incur a tax of Rs. 1,500 if the goods are unloaded within 96 hours at the destination. For other transport vehicles like trucks, trailers, and tractors carrying non-LPG goods, the same fee applies if they unload within 72 hours.
Scooters designed for use by persons with disabilities are now exempt from value-added tax (VAT). Similarly, deep-cycle lead-acid batteries for electric vehicles produced domestically will have a zero VAT rate. The Finance Bill has also imposed a 15 percent excise duty on dried coconut pulp (copra). The excise duty on sugarcane molasses has increased from Rs. 105 to Rs. 110 per quintal.
Excise duties on various food and beverage products have been adjusted. Bulgar wheat, cornflakes, and chocolates with more than 6 percent cocoa content now face a 10 percent excise duty. Juices like grapefruit, pomelo, jackfruit, cranberry, and mango have seen an increase in excise duty from 13 percent to 13.50 percent. Non-tobacco pan masala now faces an excise duty increase from Rs. 850 to Rs. 875 per kilogram, and non-tobacco scented betel nuts have seen an increase from Rs. 365 to Rs. 375 per kilogram.
Alcohol-free beer now incurs an excise duty of Rs. 45 per liter, up from Rs. 35, and energy drinks have increased from Rs. 50 to Rs. 52 per liter. Beer with up to 12 percent alcohol content will now be taxed at Rs. 460 per liter, up from Rs. 444. Beers with alcohol content between 12 percent and 17 percent will see an excise duty increase of Rs. 16 per liter, and those with over 17 percent alcohol will see an increase of Rs. 19 per liter. The excise duty on local beer (chhyang) has risen from Rs. 43 to Rs. 48 per liter.
For brandy with 48.5 percent alcohol content, the excise duty has increased from Rs. 1,800 to Rs. 1,860 per liter. For brandy with 25 UP strength, the duty has increased by 45 percent. Cigars, cheroots, and small cigars now face a 31 percent excise duty, up from 30 percent. Filterless cigarettes now incur a duty of Rs. 755 per thousand units, up from Rs. 730. Filtered cigarettes up to 70 millimeters will now have an excise duty of Rs. 1,740 per thousand units, increased from Rs. 1,690.
Products like tobacco, chewing tobacco, and gutkha will see excise duties increase from Rs. 850 to Rs. 880 per kilogram. Retail tobacco and dust tobacco will have an excise duty increase from Rs. 475 to Rs. 480 per kilogram. Packaged tobacco mixed with lime for retail sale will see a duty increase of Rs. 45 per kilogram. Hookah flavors will have an excise duty of Rs. 1,500 per kilogram, up from Rs. 1,400. Electronic cigarettes (vapes) will face a 40 percent excise duty. Body sprays and personal deodorants will see an excise duty increase from Rs. 15 to Rs. 20. Floor coverings in tile or roll form will now face a 10 percent excise duty, up from 5 percent.
Additionally, excise duties on semi-finished iron and non-alloy steel products have been removed, while laptops and notebooks will now be subject to a 5 percent excise duty.
