FY25 Budget unveils end of tax exemption on utility subsidies

June 12, 2023 (MLN): The subsidies provided by the government to consumers by paying utility companies, which were previously exempt from tax, will now be subject to taxation in FY25, as highlighted in the annual budget speech for FY25 released today.

The government has decided to adopt this change because instead of directly providing subsidies to consumers, these companies receive revenue from the government as subsidies.

This proposal is based on the principle of horizontal equity, which aims to treat all taxpayers in similar situations equally.

On the same principle of horizontal equity, the government has further proposed to enhance the current 1% rate of tax on the supply of cigarettes to 2.5%.

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