VAT+ Other consumption tax:
Elimination of all taxes (i.e. Customs Duty, GST, WHT) on 61 essential health machinery, equipment.
Elimination on the Capital Value Tax on capital market transactions.
Other consumption taxes:
(1) Extension of the deadline for payment of sales tax and federal excise duty for February 2020 (payment due on 15 March 2020) to 12 April 2020.
(2) Medical and testing equipment are exempt from duties and taxes (customs duty, withholding tax on imports, sales tax on imports) for a period of 3 months commencing from the date of publication of the Statutory Regulatory Orders. The exemption may be extended for another 3 months on the recommendation of the Ministry of National Health, Services, Regulation & Coordination in case the COVID-19 pandemic would continue.
Immediate release of tax refunds and Drawback of Local Taxes and Levies(DLTL) payments to Exporters/Industry.
Key Policy Responses as of May 6, 2021
Elimination of import duties on emergency health equipment (recently extended until December 2020); accelerated tax refunds to exporters (PKR 100 billion);
In addition, the FY 2021 budget includes further increases in health and social spending, tariff and custom duty reductions on food items, an allocation for ‘COVID-19 Responsive and Other Natural Calamities Control Program’ (PKR 70 billion), a housing package to subsidize mortgages (PKR 30 billion), as well as the provision of tax incentives to the construction sector (retail and cement companies) which got extended in the context of the second wave to the end of December 2021.
Provincial governments also implemented supportive fiscal measures from the onset of the shock, including cash grants to low-income households, tax relief, and additional health spending (including a salary increase for healthcare workers). The government of Punjab implemented a PKR 18 billion tax relief package and a PKR10 billion cash grants program. The government of Sindh’s measures included cash grant and ration distribution program of PKR 1.5 billion for low-income households. The FY2021 provincial budgets also provide tax relaxations and sizeable increases in expenditure allocations, especially on health services.