GST on supplies to Fata/Pata: Blanket exemption creates unrest among industries: FBR chief

Federal Board of Revenue (FBR) Chairman Mohammad Jehanzeb Khan has said that blanket exemption of sales tax on supplies to the erstwhile Fata/Pata up to June 30, 2023 has created great unrest among industries, as there is a huge gap between prices of products manufactured in Fata/Pata and the rest of the country.
The FBR chairman told this to the Senate Standing Committee on States and Frontier Regions which met here with Senator Taj Mohammad Afridi in the chair at the Parliament House on Monday. The committee discussed the various issues relating to merging of Federally Administered Tribal Areas (FATA) with Khyber Pakhtunkhwa (KP) and temporarily displaced persons (TDPs).
The FBR chairman told the committee that the pre-merger status of erstwhile FATA will be maintained via blanket exemption of income tax, sales tax and withholding tax from the period of the date of assent given by the President to the said conditional agreement till June 30, 2023, so as to restore the position as existed prior to the passage of the 25th Constitutional Amendment, 2018.
He said that presently there is a blanket exemption of sales tax on supplies to the erstwhile Fata/Pata up to June 30, 2023. This, however, has created great unrest among industries in the country as there is a huge gap between prices of products manufactured in the FATA/ Provincially Administered Tribal Areas (PATA) and the rest of the country.
Senator Hilal-ur-Rehman raised the issue of future of employees of FATA Secretariat in the meeting and said that these individuals have dedicated their lives to the Secretariat and it is imperative that measures be taken to protect them. He recommended that chief secretary KP be summoned in the next meeting for more details on this issue.
The committee stressed the need for an amicable solution to rehabilitation issues encountered by the IDPs from district Khyber and those from Koka Khel, Teera Rajgal. The committee was informed that the Fata Disaster Management Authority (FDMA) is doing its best to ensure that all IDPs registered or unregistered have access to basic amenities on humanitarian grounds. It was also informed to the committee that unregistered IDPs must fill out a return facilitation form, which is forwarded by their political agent or DC. It is believed that only 1,700 IDPs have been registered.
The committee was told that it is imperative that the return and rehabilitation process be streamlined; however, opening the registrations for all at this critical juncture will affect sustainability. The secretary Ministry of States and Frontier Regions (SAFRON) was of the view if registration is reopened, it will open floodgates that will be impossible to contain.
Discussing the bidding process by the Civil and Works Department, the committee was informed that any change in the terminology of the addendum for the procurement of solid waste vehicles and machinery would create legal issues and invite stringent scrutiny by the law enforcement agencies (LEAs). It was revealed that enormous laxity has already been given while remaining within the rules.
The secretary Local Government and Rural Development of Merged Areas was of the view that despite believing in ease of doing business, the organisation cannot compromise on the rules or quality. Chairman committee Senator Taj Muhammad Afridi said that it is imperative that Pakistanis be given a fair chance to compete so that local business is facilitated.
The meeting was attended amongst others by Senator Haji Momin Khan Afridi, Senator Hidayat Ullah, Senator Hilal-ur-Rehman, and Senator Najma Hameed, besides senior officers from the Ministry of SAFRON, Federal Board of Revenue and others.