Finance committee rejects proposals to increase sales tax on various items


ISLAMABAD: The Standing Senate Committee on Finance, Revenue and Economic Affairs rejected proposals to impose 17 percent turnover tax on items, including precious jewelry, infant formula, bicycles, and contraceptives.

The development came at a parliamentary group meeting held here on Thursday under the chairmanship of Senator Talha Mahmood to finalize recommendations for the (Supplementary) Finance Bill, 2021.

From the details, current sales on gold and diamonds is 1.5 pc and 2 pc, while the sales tax of 3 pc is levied on the manufacture of gold articles while the complementary finance bill suggests imposing a sales tax of 17 pc on gold, diamonds, finished articles of jewelry or parts of other precious metals used in the manufacture of precious jewelry.

Meanwhile, the Progressive Jewelery Group (PJG) has proposed to impose a 10pc sales tax on the manufacture of gold items instead of the 17pc offered by FBR for gold and diamonds smuggled into Pakistan. However, the association lamented that Pakistan does not have a gold import policy and tax system.

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An official from the Ministry of Commerce told the committee that there are loopholes in the law and no one can easily import gold due to the harsh conditions on foreign exchange.

Committee members expressed skepticism over the association’s claims that 80 tons of gold are smuggled into the country each year. “What is the RBF doing to stop this smuggling?” Asked Senator Farooq H Naek.

Membership Policy FBR informed the committee that 160 tons of gold are used annually in Pakistan while the gold market in the country is around 2.2 trillion rupees. “Only Rs29 billion gold market are declared while out of a total of 36,000 goldsmiths, only 54 pay taxes, ”he said.

The chairman of the committee said he could not understand the analogy behind the proposed amendment which will result in encouraging the industry of undocumented business.

The Committee noted that the proposed amendment is highly discriminatory and will only affect registered companies.

Likewise, the committee considered a petition from the matchbox industry on the proposed modification of a tax exemption on matchboxes with the directive to retain the previous sales tax regime of industry with the aim of securing the documented industry and increasing revenues in the interest of the state.

The committee also unanimously rejected the proposed 17pc sales tax on infant formula and other products of common interest, saying that a tax affecting the growth and health of infants would put the country to shame. National level.

Speaking on the occasion, Senator Kamil Ali Agha said that the Federal Board of Revenue (FBR) is a “malicious entity”. “It collects 450 billion rupees annually through various tax regimes,” he lamented.

The president’s committee has shown its intention to form a committee to examine the work of tax collectors and inspectors and from which they derive millions of rupees despite very low wages.

In addition, a DRAP representative informed that as discussed at the previous meeting, the prices of registered drugs will not be increased under the new GST regime. The authority informed that the prices of drugs with therapeutic value will not be increased; However, those with nutritional value will be billed with a sales tax of 17pc.

The committee observed that solar panels have also been taxed at 17%, while taxes are also levied on imported bicycles. He proposed to impose the tax only on bicycles above 25,000 rupees.

The FBR member informed the committee that the tax department has also proposed to impose a 17% duty on goods intended for donation to hospitals, educational institutions and other entities. So, Senator Sherry Rehman said people will stop donating to these places which operate for the public welfare.

The committee rejected the proposal, saying donors would hesitate to donate if they had to pay taxes for doing a good deed.

Likewise, the committee also rejected the proposal to impose a sales tax on contraceptive drugs that were exempt from tax in previous finance bills.

We can mention here that the parliamentary panel gave an informed reading of the finance bill and debated in depth on each point in the wider interest of the general public, reserving discussion on several clauses, requiring data and statistics to be provided on the income generated in the previous regime so that they can be carefully studied to understand the rationale for the proposed changes.

It was unanimously agreed that the government should provide assurances that the recommendations will be recognized or not so that countless unnecessary hours are not spent debating an issue that will not yield progressive results.

“If the financial advisor and his team aren’t there, who will we send our recommendations to? »Declared Musadiq Malik.

The chairman’s committee assured members that it had urged Finance Minister Shaukat Tarin to accept the recommendations in letter and spirit, in addition to expressing that the integrity of the committee can be maintained and that the presence of the Minister, Secretary and other senior officials can be observed.


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