The government is considering withdrawing its proposal to bring exporters into the normal tax regime. Instead, it may impose a higher tax rate of 2-3 percent on their export proceeds.
With less than a week left before the new fiscal year commences, changes to the Finance Bill 2024-25 are imminent and still may include some relief for exporters. Ongoing discussions with the International Monetary Fund (IMF) are crucial as unresolved issues could impact the government’s efforts to secure a new bailout program, reported a national daily.
If this is finalized in the 2024-25 budget, it will show that the government has succumbed to pressure from exporters, who have strongly opposed any efforts to include them in the normal tax regime.
Exporters, contributing around Rs. 90-100 billion annually, have resisted entering the normal tax regime and suggested a higher tax rate on their proceeds.
Currently, exporters pay a final tax of 1 percent on export proceeds. The government, under IMF pressure, earlier proposed to treat all incomes equally. Regardless, discussions are ongoing to set an increased rate of 1 to 3 percent for the 2024-25 budget.
Regarding the government’s proposal to remove tax rebates for professors and researchers, some university representatives have warned that it would hinder retaining quality educators and harm higher education quality.
Presently, full-time teachers and researchers at non-profit institutions receive a 25 percent tax rebate. If abolished, this rebate removal would increase tax liability for full-time faculty by 30 percent, significantly raising their tax burden compared to other salaried individuals. Leading universities warn this policy change could jeopardize educational institutions nationwide, especially non-profits, by making it harder to attract and retain qualified educators.
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