ISLAMABAD: The Federal Board of Revenue (FBR) has assured the finance committee that it will review the omission of incentives allowed for the manufacturing of hybrid electric vehicles and proposed penalty on the telecom sector for not blocking SIM cards of identified non-filers mobile after industry expressed serious concerns on these proposed measures.
This assurance was held out by the FBR chairman to the Senate Standing Committee on Finance meeting presided over by Senator Saleem Mandviwalla to review the Finance Bill, 2024, on Thursday.
The chief executive officer of Indus Motor informed the committee that the auto sector has made an investment of $100-150 million for manufacturing of hybrid and electric vehicles under auto policy till 2021-26 and now abruptly, the government has withdrawn the incentives allowed under Article 73 of Schedule 8th six months after the investment.
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Faisal Vawda supported the industry and stated that the decision would damage the investment and wanted the people involved should be taken to task.
The representative of the industry also pointed out that the price of a Rs22 million vehicle included Rs13 million in taxes while the actual cost was only Rs9 million.
The FBR chairman assured the committee that “we will review it”.
The telecom sector expressed its inability to block the SIM cards of identified non-filers and stated that the Finance Bill 2024 has proposed a heavy penalty of Rs100 -200 million for failure to block SIM cards, adding that the entire economy is dependent on two things – data and bandwidth.
The representatives of the industry also pointed out that two companies have already left and only three are operating in the country. Besides, the industry is custodian of $20 billion investment, contributes five percent to the GDP and is large tax payer as well as investing every year for the roll out.
The committee, comprising senators Sherry Rehman, Farooq Hamid Naek, Mohsin Aziz, Faisal Vawda, and Manzoor Ahmed Kakar, along with officials from the FBR and relevant stakeholders, engaged in extensive discussions over two sessions spanning a total of seven hours.
During the first session, significant focus was placed on federal excise provisions within the Finance Bill. Detailed deliberations ensued regarding the proposed amendment to penalise retailers selling cigarette packs without proper tax stamps or labels, with provisions for sealing their outlets.
Amendments were also discussed regarding the taxation on e-liquids and restrictions on introducing new cigarette brand variants at lower prices. The committee approved the imposition of an 18 per cent sales tax on nicotine pouches and discussed duties on electronic cigarette imports.
The committee also deliberated the proposal to abolish the 20 percent federal excise duty (FED) on packaged juices.
The Fruit Juice Council argued that the current tax structure, coupled with GST, adversely affects consumer affordability and hampers export potential for local juice manufacturers. However, the committee decided to retain the existing tax structure, emphasising continuity with previous financial legislation.
Discussions also addressed taxation issues in the property sector and anticipated inflation rates for the upcoming financial year.
Senator Saleem Mandviwalla raised concerns about potential consumer impacts due to tax levies, while the chairman of the FBR highlighted current tax rates in various sectors.
The committee debated tax rates on electric and hybrid vehicles, with Senator Faisal Vawda advocating for supportive policies to maintain investor confidence in fuel-independent technologies. The FBR officials clarified taxation disparities between imported and domestically manufactured vehicles, emphasizing the Ministry of Industry’s jurisdiction over such matters.
The second session included presentations from stakeholders in the telecommunications and steel mill industries. The telecommunications sector presented grievances related to the advance tax collections and sales taxes on mobile handsets, while issues pertinent to the steel mill industry were referred to an anomaly committee for further review and resolution.
In response to inquiries about inflation projections for the upcoming financial year, the chairman of the FBR indicated uncertainty but expressed confidence in revenue growth.
Senator Mandviwalla highlighted concerns that increased taxes may translate into higher inflation rates.
The committee concluded with recommendations to engage further with stakeholders on unresolved issues and to ensure fair taxation policies that support economic stability and growth.
Copyright Business Recorder, 2024
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