ISLAMABAD: The Federal Board of Revenue (FBR) Chairman, Amjed Zubair Tiwana, informed a Senate panel on Saturday that 18 per cent general sales tax (GST) had been proposed for packaged food items for the next fiscal year, including pulses, rice and other items.
However, he clarified that there would be no GST on unprocessed and unpackaged food items.
Tiwana was briefing the Senate Standing Committee on Finance and Revenue, which continued its daylong meeting at the Parliament House here to finalise recommendations on the Finance Bill 2024-25. The FBR chairman stated that packaged milk and infant milk prices had been increased and added that if the companies pass on benefits to consumers, a phased GST could be considered for them.
The Senate panel endorsed banning foreign tours of non-filers. The panel rejected the hike in tax rates for the salaried class in totality after being informed by the FBR chairman that the salaried class was contributing Rs375 billion to national exchequer while exporters were paying just Rs90-100 billion annually. The retailers, who are estimated to be around 3.6 million across country, are just paying Rs4-5 billion tax on an annual basis. The senators got perturbed over such an unfair taxation regime and rejected the hike in tax rates for the salaried class in totality.
The committee members seemed divided over the FBR move to treat the exporters income under the normal tax regime against the earlier tax rate of just 1pc of their income. Senator Farooq H Naek from the PPP extended his all-out support to the FBR’s move to bring exporters under the normal regime. He argued that when they could contribute up to 45pc as a non-salaried class, then why exporters were getting such incentives?
Committee Chairman Senator Saleem Mandviwalla, who also belongs to the PPP, opposed the FBR move arguing that exporters were bringing dollar inflows and might stop bringing their inflows into the country.
The FBR chairman said it was an equity and fair taxation perspective for jacking up tax rates for exporters and retailers, as the Board had estimated that converting exporters into a normal regime would fetch Rs125 billion in additional revenues. He said the FBR took steps to bring retailers into the tax net and it was estimated that the tax collection would go up to Rs50 billion from retailers in the next fiscal year against the existing level of Rs4 billion on an annual basis.
The FBR chairman informed the Senate panel that the tax slabs were revised upward for salaried class. He said that for slab one, comprising those earning from Rs600,000 to Rs1,200,000 annually, the effective tax rate had gone up from Rs1,250 to Rs2,500 per month. For the tax slab earning from Rs1.2 million to Rs2.2m annually, the tax rate had been increased from Rs11,668 to Rs15,000 per month. For a salaried slab of Rs2.2 million to Rs3.2 million annually, the tax rate was increased from Rs28,750 to Rs35,834 per month. For a slab of Rs3.2 million to Rs4.1 million, the tax rate was increased from Rs47,000 to Rs58,000 per month.
He said the International Monetary Fund (IMF) had demanded unified slabs for salaried and non-salaried classes and slapped higher rates of 45pc tax. “We remained engaged in intense discussions with the IMF for three days and convinced them to reduce tax rates for salaried class,” he added.
Senator Anusha Rehman from the PMLN also opposed hiking tax rates for the salaried class.
The Senate panel also rejected the FBR move for charging a fixed rate of 15pc for filers and 45pc for non-filers as capital gains tax on the real estate and securities, irrespective of the holding period. It further rejected the proposal to send the parliamentarians’ records to the National Database and Registration Authority (Nadra) for collecting tax.
Senator Shibli Faraz from the PTI said coercive measures would not help broaden the tax base. The senators discussed hiking the tax rates for non-filers from 15pc to 75pc on the use of mobile-phones for persons whose names are appearing in the income tax general order for non-filing of returns even after getting notices.
