–FBR chairperson says tax department has proposed measures to facilitate people, increase revenue
ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) government has given relief of Rs45 billion in taxes by decreasing regulatory, as well as customs and additional customs duties, on 1,632 tariff lines (20,000 items), Federal Board of Revenue (FBR) Chairperson Nausheen Javed Amjad said on Friday.
The FBR chief said that the government did not impose any new taxes, but rather it has given relief on thousands of items, including cement, mobile phones and cooking oil.
She said that they had proposed increasing regulatory duty on smuggling prone items such as stationary, yarn, fabric, LEDs, etc. to protect local industries. She added that the FBR would collect sales tax from point of sales (POS), which would be integrated with their systems. She estimated that around 15,000 new POS would be integrated with their system and decreasing sales tax from 14 per cent to 12 per cent would increase tax revenue.
The FBR chairperson said that they would bring major changes in sales tax registration. She said that they have also proposed reducing Federal Excise Duty (FED) on cement from Rs2 per kg to Rs1.75 per kg due to the ongoing situation because they believe that it would help bring down cement prices.
Regarding the proposed increase in GST and PDL taxes, Nausheen said that the government is not increasing GST on petroleum products while PDL comes under the Finance Ministry’s domain, therefore, she could not comment on that matter.
Member Inland Revenue Policy Dr Hamid Attique said that the government has deleted some withholding tax provisions pertaining to collection of advance tax on education related expenses remitted abroad.
He explained that FBR was charging 5 per cent tax on education-related expenses. “Now we have proposed to end this tax for those who are on the Active Taxpayer List (ATL) and submitted fees to schools, while those who are not ATL will pay 5 per cent tax to the tax department,” he added.
He said that the government has also abolished advance tax on functions and gatherings and the tax department would not be collecting tax from cable operators as well as electronic media.
He also said that the government has given tax exemptions to commission agents, dealers and market brokers. The decision was taken because farmers’ sales were affected due to this tax and the incumbent government wants to facilitate farmers so this tax has also been abolished, he added.
He further said that they have also proposed abolishing advance tax on insurance premium. Government wants to expand the insurance business in the country so that is why the tax has also been abolished, he added.
Dr Hamid said that on the request of the Pakistan Tobacco Board, the government has abolished the 2 per cent tax on tobacco.
He said that the above-stated measures would reduce the cost of the compliance, enhance the control of FBR over the withholding tax regime and would be pivotal in promoting ease of doing business in the country.
He also said that they have also enhanced the amount for becoming a prescribed person for withholding tax on supplies, services, etc. and a similar threshold is also being prescribed for a person registered to collect sales tax to become a withholding agent. He added that withholding agents were not submitting taxes to the government despite the fact they collected them from the consumers.
He further said that FBR has also forwarded a proposal to stimulate economic activity in the real estate sector as per the wishes of the incumbent government.
Dr Hamid said that overseas Pakistan were sending over $20 billion in remittances and they asked the State Bank of Pakistan (SBP) to ensure that people withdrew cash from the same accounts in which the amount was deposited. “If the money is withdrawn from the same account then we have proposed exempting withholding tax on cash withdrawal for foreign remittances,” he said.
He said that the government is offering incentives to non-resident Pakistanis. If they make investments in government debt instruments through foreign bank accounts then they are exempted from filing returns as well as exempted from 10 per cent tax, he added.
He also said that the FBR chairperson was keen on making a centralised tax refunds system. The business community would benefit from this system, he added.
Dr Hamid said that they have proposed exempting Hajj operators from withholding tax on payment to non-residents. They are of the view that they barely earn Rs30,000 to Rs40,000 from one person and these taxes are paid to hotels as well as travel agents.
Regarding taxes on vehicles, he explained that they have imposed tax on vehicles up to 200cc in the outgoing year and rickshaws and motorcycles were also included in this, however, they have now decided to exclude both vehicles from this category.
Dr Hamid said that they have proposed good specific tax in the upcoming budget. “Large scale importers took advantage of this facility as they imported items at zero rate whereas local businessmen paid tax on this so we have proposed good specific rates according to the type of goods with tax at 1 per cent for capital goods, 2 per cent for new materials and 5.5 per cent for finished goods irrespective of status of the importers,” he said.
He said that they have also proposed a taxpayer profile from the upcoming year. “Through this, we will give six-months’ time to the taxpayers to update their gas, electricity and other bills on the website and 90 days for those who want to register themselves as taxpayers. The government will impose the penalty and detect new taxpayers from this system,” he added.
FEDERAL EXCISE DUTY:
Dr Hamid said that FBR has proposed to increase the retail price of cigars whereas the rate of Federal Excise Duty (FED) on filter rods would be increased from Rs0.75 to Rs1 per filter rod. The purpose of increasing this to document this sector, he added.
Similarly, he said, the FBR has also proposed a levy of FED on e-liquids of electronic cigarettes at Rs10 per ml and 25 per cent on caffeinated energy drinks. Caffeinated energy drinks include the Red Bull, Sting, Monster and common people never drink these, while only the affluent class can pay a high price for them, he added.
He also said that the FBR has also proposed reducing FED on cement from Rs2 per kg to Rs1.75 per kg due to the worsening effect of Covid-19 and reduction in production of cement.
He further said that they have also extended the scope of seizure of non-duty paid goods to all products’ subject FED, other than cigarettes and beverages, and have directed the National Database Registration Authority (NADRA), Federal Investigation Agency (FIA), provincial excise and taxation departments to provide real time data in this regard.
Dr Hamid said that they had made CNIC mandatory for customers who purchase items over Rs50,000, however, this requirement would now apply to purchase of items over Rs100,000, in line with the wishes of the business community.
In addition to this, he said, they have also extended the period for exemption on health-related items and equipment till September.
Dr Hamid said that they have also proposed giving relief to the retail sector by reducing sales tax from 14 per cent to 12 per cent to document the sector.
Responding to a question, he said that they have plans to integrate some 15,000 POS in the upcoming months and they would also get more sales tax from this exercise.
He also said that FBR has proposed to amend rules in line with mobile manufacturing policy approved by the Economic Coordination Committee (ECC) of the federal cabinet. “Presently, we have 160 million mobile phone users and the government wants to promote the local industry. For this we have proposed to end the taxes on phones worth $350 and we have also proposed increasing tax on phones over $350 to Rs10,000. The purpose of increasing tax on mobile phones is to save the local industry,” he added.
Member Customs Policy Javed Ghani said that they have proposed reducing regulatory duty on hot rolled coils (HRC) of iron and steel from 12.5 per cent to 6 per cent and 17.5 per cent to 11 per cent, respectively. “Pakistan is importing Rs3 billion worth of these items on a yearly basis just because our steel mill is closed. The business community will benefit from this,” he said.
He further said that FBR has also proposed exemption of customs duty of raw material of butyl acetate, syringes and saline infusion sets, buttons, interlining, wire rod and internet cable landing stations.