Govt proposal rejected by Senate body

ZAHEER ABBASI

ISLAMABAD: The government’s proposal to increase sales tax to 20 percent (17 percent sales tax and three percent further tax) on unregistered persons was turned down by the Senate Standing Committee on Finance on Thursday after the committee members opposed the proposal.

A meeting of the finance committee, presided over by Senator Farooq H Naek, while continuing discussion on the Finance Bill 2018, was also informed about slash in sales tax on LNG and RLNG imported by Pakistan State Oil and Pakistan LNG Limited from 17 percent to 12 percent. The committee considered proposed amendments to the Sales Tax Act 1990 and was informed that there is proposal to increase further sales tax from two percent to three percent on supplies to the unregistered persons; however, the proposal was opposed by the senators.

Senator Mohsin Aziz argued that he was also against the increase in additional sales tax from one percent to two percent in Finance Bill 2017 because this may contribute to tax collection for the FBR but would not serve the purpose to bring the unregistered persons in the tax chain.

He opposed the proposal to increase additional tax from two percent to three percent and suggested that “either additional sale tax for unregistered individuals should be increased to 25 percent to become registered or close down their business.” The committee, after hearing the arguments of both sides, turned down the proposal to increase the tax from 2 percent to 3 percent.

The committee also discussed the proposed new alternative dispute resolution committee and Dr Muhammad Iqbal Senior Member Inland Revenue Policy informed the committee that the ADR will be different because its decision, contrary to previous one, will be binding on FBR and tax payers. However, Law Division was asked to frame the recommendations of the committee with regard to composition of the ADR in legal language before its approval from the committee on Friday.

The FBR officials also stated there was also proposal that zero rating on stationary items has been restored on various heading from colors in sets to writing, drawing and marking inks to erasers, exercise books etc. The proposals for exemption in sales tax on import of papers and other items announced by the finance ministers during his budget speech were also shared with the finance committee. The finance committee was told that all the SROs issued after 2015 will be placed before the Parliament for making them part of the Finance Bill 2018 in order to continue with the exemption.