Prime Minister Yousuf Raza Gilani is likely to chair a meeting with business community representatives in Islamabad on Friday to discuss five zero-rated sectors' issues. A meeting of Chairman Federal Board of Revenue (FBR), Salman Siddique, with Karachi Chamber of Commerce and Industry (KCCI) on five zero-rated sectors on Thursday, however, remained inconclusive.
This was the third visit of chairman FBR along with his team but the meeting failed to produce any result. On last Sunday Federal Finance Minister Dr Abdul Hafeez Shaikh also visited the chamber along with chairman FBR to sort out irritants about tax on five zero-rated sectors but this meeting was too ended with no results. According to sources, Salman Siddique said that a number of issues had been covered during his meeting with business community. He expressed hope that issues related to five zero-rated sectors would be resolved in the meeting.
The government through an ordinance withdrew exemption of 17 percent General Sales Tax (GST) on local sale by five zero-rated sectors including textile, carpets, leather, sports goods, and surgical items binds businessmen to deal only with registered taxpayers otherwise they would be liable to pay the 17 percent sale tax.
According to sources, the chairman FBR insisted that tax be imposed on zero-rated sectors which should be refunded later on. One suggestion of the chairman FBR was to have at least 10 to 12 percent GST.
The chamber side insisted that these sectors be kept untouched. It was said that under prevailing situation there is no justification for withdrawal of zero-rating. However, at one stage, a chamber representative suggested that 4 to 5 percent GST be imposed on local sale of these five sector products.
The participants also opposed increase in excise duty and sales tax on all inputs including imports and withdrawal of 17 percent GST exemptions on fertilisers, pesticides, tractors, leather, sports and surgical goods.
They were of the view that business community was pleading for tax on agriculture income and not for tax on agriculture inputs.
The issue of tax on second hand imported clothes also came under discussion. The chamber President Saeed Shafiq pleaded that that these clothes are generally purchased and used by poor segment of the society and tax on these items would definitely result in increase in its prices He pleaded that second-hand clothes sector be exempted from tax in any shape as poor people were already finding it hard even to feed their families properly due to soaring prices of goods in general and food items in particular. Another issue which came under discussion related to increase in Special Excise Duty (SED) from one percent to 2.5 percent under Federal Excise Amendment Ordinance 2011. The meeting was attended by presidents and chairmen of various associations and trade bodies of the country and former chairman FBR, Abdullah Yusuf.
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