Senate panel opposes taxes on hybrid vehicles, property

ISLAMABAD: While Senator Faisal Vawda disclosed that parliamentarians were owners of smuggled vehicles, the Senate Standing Committee on Finance strongly opposed taxation on property, jacking up of GST rate to 25 percent for hybrid/electric vehicles and slapping a huge penalty on mobile operators.

The Senate Standing Committee on Finance and Revenues on Thursday resumed its deliberations to finalize recommendations on Finance Bill 2024-25 under the chairmanship of Senator Saleem Mandviwalla at the Parliament House. It was quite interesting to witness the PPP senators extend support to the FBR taxation proposals. No senator from the treasury benches was present in the Senate panel meeting.

Senator Faisal Vawda disclosed that he knew the names of those who have parked smuggled/untaxed vehicles at the Parliament House. He also came down hard on the bureaucracy for hiking the GST rate from 8.5 percent to 25 percent despite a commitment given by the SIFC and prime minister that the GST exemption for hybrid/electric vehicles would continue uninterrupted. He also claimed to know why an SRO was issued for allegedly benefitting one vehicle manufacturer with billions of rupees during PTI’s tenure without informing the former premier. The senator alleged that the hybrid vehicle’s GST was increased when a $150 million investment to start production was nearing completion.

Ali Asghar Jamali from Indus Motors stated that in the presence of Japanese ambassador, the government had pledged to provide incentives. But the GST was jacked up from 8.5 to 25 percent in the budget without consultation. The Indus Motors representative and FBR chairman contradicted each other when the former claimed that the government was charging Rs130 million as taxes on one of the branded vehicles whereas their production cost was just Rs9 million. The FBR Chairman, Amjad Zubair Tiwana, counted all the taxes and argued that all taxes could not go beyond 45 percent. The Engineering Development Board supported imposing previous GST rates of 8.5 percent on hybrid vehicles and opposed jacking it up to 25 percent. Senator Faisal Vawda demanded rolling heads of those who sabotaged the investment of $150 million to create stumbling blocks in promoting the SIFC endeavours.

Earlier, Senator Vawda also opposed heavy taxation on real estate. The FBR Chairman, Amjad Zubair Tiwana, said that the IMF had asked for equal taxation on all kinds of incomes but they convinced the IMF to restrict the gains tax on filers at 15 percent and 45 percent on non-filers. He said that the tax on properties was still “favourable”. The FBR chairman said that the tax on salaried class stood at 35 percent and non-salaried at 45 percent while gains tax on property for filers was standing at 15 percent.

On the imposition of 5 percent FED on property transactions, Senator Farooq H Naek said that it would be challenged in courts. He said he would oppose any efforts to stretch the FED law for imposing a tax on property transactions. On advance tax for sellers and purchasers under 236C and 236K, the FBR chairman said that it was an adjustable tax and for non-filers and late filers the rate of taxes had been increased.

Representatives of mobile operators made a representation before the Senate panel and stated that the FBR converted foreign investors into law enforcement agencies and made it mandatory to block the SIMs of non-filers. They said that in the case of non-compliance by 15 days, the FBR proposed powers to slap a penalty of Rs100 million to Rs200 million. For non-filers, the advance tax on card charging of Rs100 has been increased from 15 percent to 75 percent. The mobile operators argued that they do not have any installed system to segregate filers and non-filers. The FBR chairman said the mobile operators asked to visit the installed system but cancelled it just one night before checking the system. The Senate panel asked the FBR to come up with a proposal for the penalty with staggered slabs instead of imposing a Rs100 million to Rs200 million penalty in one go in case of non-compliance over the blocking of SIMs by operators.