The Budget 2015 tabled by Prime Minister Datuk Seri Najib Tun Razak on Friday outlined key areas that will help alleviate the rakyat’s burden, said tax analyst.

Executive Director KPMG Tax Services Neoh Beng Guan welcomed the budget’s initiatives to help manage cost of living but wants more details on policy implementation be revealed soon, including the scope of goods and services that are not subjected to the Goods and Services Tax (GST) scheduled to be implemented in April.

“This budget covers a wide variety (of initiatives) to cover most of the current issues faced by the rakyat.”

“On GST, two things stood out – the 2,900 medicines or drugs under the expanded zero-rated goods list and GST relief of RON95 petrol. These two will definitely help cushion (the impact of GST) on the rakyat,” said the tax analyst on the Budget 2015 discussion on Astro AWANI.

The government had widened the scope of items that will not be subjected to GST, including 2,900 medicine brands under the National Essential Medicine to treat 30 types of disease such as heart failure, diabetes, hypertension, cancer and infertility.

Basic foods items such as food, bread, coffee as well as reading materials like children's coloring books, exercise and reference books, text books, dictionaries, religious books and newspapers are also listed under goods that are not subjected to GST.

However, it was not made clear whether the items will be tax exempted or zero-rated.

“Both have different outcomes,” said Universiti Sains Malaysia Economics Professor Suresh Narayanan from Universiti Sains Malaysia.

“Zero-rated means the suppliers who sell these goods can still claim back the necessary costs of the input tax. Under tax exemption, the commodities won’t be taxed but suppliers will not be able to claim input tax,” he explained.

“If the government wants to do this, the goods should be zero-rated. If it is not, we will still be paying for taxes but just at a lower rate,” he said.

With the implementation of GST, the government is taking measures to reduce the rakyat’s burden by restructuring individual income taxes.

Some 300,000 taxpayers will no longer pay income tax next year as the individual income tax rates will be reduced by 1 to 3 percentage points.

Meanwhile, taxpayers with families and income of RM4,000 per month will be non-taxable.

Individual income tax will also be restructured whereby the chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000. The current maximum tax rate at 26% will be reduced to 24%, 24.5% and 25%.

For year of assessment 2015, the cooperative income tax rate will also be reduced by 1 per cent to 2 per cent and secretarial fees and tax filing fees are allowed as deductions.

For year of assessment 2016, corporate income tax rate will be reduced by 1 per cent from 25 per cent to 24 per cent; and for 2016, the income tax rate for SMEs will also be reduced by 1 per cent from 20 per cent to 19 per cent.