ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has accused the Federal Board of Revenue (FBR) of overreaching in levying tax on government subsidy, despite the fact that it is not an income, well-informed sources told Business Recorder.
On August 15, 2024, Industries and Production Division briefed the forum that the Utility Stores Corporation (USC) had been providing five essential items at subsidized rates since January, 2020, under Prime Minister’s Relief Package (PMRP).
For the FY 2023-24, Federal Cabinet on August 09, 2023 while ratifying ECC decision of August 07, 2023, had granted approval of Rs.35 billion till June 30, 2024, as Targeted Subsidy Model which had been successfully implemented by the USC.
ECC says relief package through USC to continue
The Government had allocated Rs.60.00 billion in the budget for 2024-25 under Prime Minister’s Relief Package and Ramazan Relief Package 2024 through USC.
Industries and Production Division briefed the forum that as the amount of subsidy was to be utilized to provide relief to poor segments of society which was mapped through Benazir Income Support Program (BISP) data, five essential items were provisioned for targeted population (up to PMT-40) registered with BISP, at subsidized rates. The subsidy (per household) is Rs. 2,734 per month for FY 2023-2024 whereas proposed revised subsidy for FY-2024-25 is Rs.3,650 per month with the increased amount of Rs.916 per month @ of 25.09% increase in overall subsidy per household.
The Industries and Production Division submitted the following proposals for consideration and approval of the ECC: (i) Prime Minister’s Relief Package for FY 2024-25 is for 10 months - from August 1, 2024 to 30th June, 2025 (excluding the month of Ramzan) with the direction to Finance Division to release the funds on monthly basis); (ii) approval of PMRP on Existing Targeted Subsidy (PMT-40) with proposed revised price and subsidy; (iii) continuation of Prime Minister’s Relief Package beyond June 30, 2024 till 31st July, 2024 as per subsidy utilization or till approval of proposed package on Existing Targeted Subsidy Model and prices; and ( iv) turnover tax @ 1.25 % on subsidy to the FBR from the budgeted amount of subsidy for FY 2024-25.
During the ensuing discussion, the forum was briefed that the Government had already earmarked Rs.60 billion in budget 2024-2025 for providing relief to the poor through Utility Stores Corporation. It was mentioned that the households falling within the poverty score of 40 under the BISP poverty survey would be provided relief on five essential commodities.
It was also noted that during previous year, beneficiaries were targeted up to PMT 30, and that this year target group had been expanded to include around60% of the population. It was added that households would be provided relief on the mentioned items on production of computerized National Identity Cards together with biometrics verification to avoid misuse of the Relief Package.
The forum was also apprised that USC had an automated platform ensuring end-to-end visibility of each and every transaction. The forum, while referring to the budget allocation of Rs.590 billion for BISP in the Current Financial Year, reiterated that the targeted subsidy for the poor should continue.
The forum was not convinced to provide subsidy on Sella Rice and Basmati being superior varieties of rice and were, in fact, not the priority items for the poor households. The forum raised a question that USC was procuring wheat at prices higher than the prevailing prices in the market.
Copyright Business Recorder, 2024
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