Three critical issues yet to be decided
SOHAIL SARFRAZ
ISLAMABAD: The issue of imposition of 17 percent sales tax on mobile phone, stationary items/writing instruments and certain packaged food items is pending before the government for withdrawal of Rs330 billion sales tax exemptions under the draft Tax Laws (Amendment) Bill 2021.
Sources told Business Recorder, here on Friday that the draft of the Tax Laws (Amendment) Bill, 2021 has been finalised and vetted by the Law Division.
The words “Ordinance” has been replaced with the “Bill” wherever appearing in the draft of the Tax Laws (Fourth) Amendment Ordinance, 2021.
However, the government has to take final decision on three critical issues, ie, withdrawal of sales tax exemption on mobile phones; stationary items and packaged food items.
Once the government finalise the decision to retain these exemptions or impose 17 percent sales tax, the draft of the Tax Laws (Amendment) Bill 2021 would be presented before the Cabinet for approval.
There is a strong likelihood that the bill would be approved from the National Assembly by the end of November or start of December 2021.
According to the sources, initially the government decided to impose 17 percent sales tax on cellular mobile phones in the CKD/CBU form under the Ninth Schedule of the Sales Tax Act, 1990.
However, now it has been decided to completely abolish the Ninth Schedule of the Sales Tax Act, 1990.
This would result in imposition of 17 percent sales tax on all kinds of phones under the Ninth Schedule of the Sales Tax Act, 1990. Second, the most critical issue pending before the government is to impose 17 percent sales tax stationary items/writing instruments.
The decision would directly impact consumers of educational items particularly, students. The decision would increase prices of stationary items by 17 percent.
It would impact essential educational requisites as pencils, pens, exercise books, rubber erasers, pencil sharpeners, marking pens etc, and result in drastic increase in retail prices of educational requisites; significant increase in the burden on common man and poor education seekers and rendering the local industry unviable against imports, sources said.
Third, the withdrawal of sales tax exemptions from packaged food items would also increase its costs.
Certain food items are subjected to sales tax exemption under the Sixth Schedule of the Sales Tax Act, 1990.
Now most of the items specified in the Exemption Schedule of the Sales Tax Act, 1990 would be subjected to 17 percent sales tax exempt essential food items, they added.
