Islamabad: The government is planning on lowering the tax burden on Small and Medium Enterprises with an annual income between Rs 150 and Rs 500 million, in order to stimulate growth in that sector of the economy. Minister of State for Finance, Revenue and Railways Bilal Azhar Kayani made the announcement on Saturday the federal government. Accordint to he minister, the government has abolished the supertax for exporters and SME's that fall within the specified income bracket.

The government has also reduced the tax rate at the proceeds stage from 2.25 percent to 1.25 percent. Exporters have been exempted from super tax completely, while the rate for businesses earning more than Rs 500 million has been cut from 10 percent to eight percent.

The export development surcharge has also been abolished, while the chairmanship of the Export Development Fund has been handed to the private sector.

Kayani said Prime Minister (PM) Shehbaz Sharif had formed working groups before the budget to address business related issues and the supertax was among the most important highlighted by members of the SME business community.

The government is also bringing a new tax format for shopkeepers according to Kayani, who said the scheme was meant for small shopkeepers and was open to both filers and non filers. Under the scheme, shopkeepers would pay withholding tax, with Rs 25000 payable in all cases. Those joining the scheme and paying tax would not face an audit unless they gave falsified information to the authorities. The program will be available to shopkeepers with an annual income of up to Rs 200 million and the government says it will work with traders associations where necessary to provide incentives and support for those who join.