Finance Minister Ishaq Dar has assured National Assembly Standing Committee on Finance that government would accommodate its recommendations to the budget for next fiscal year in the amended Finance Bill 2016. Chairman of the finance committee Qaisar Sheikh informed the committee members on Thursday that he met with Finance Minister and informed him about the committee's recommendations.
"The Finance Minister has given the assurance that most of the National Assembly's Standing Committee's recommendation would be incorporated in the Finance Bill," he said. The Chairman of the committee stated that the "response of the government as well as FBR on the recommendations of the committee was very positive".
"The proposed measure would increase tax corruption and taxpayers would adopt other means," he further stated on the issue of input adjustment. The chairman of the committee stated that there was duplication on services. The member of FBR's Inland Revenue Policy Rahmutullah Wazir stated that some solution to this problem would be found out. He added that sale tax regime is so big that some disputes always continue to emerge.
"We have abolished Federal Excise Duty (FED) on seven to eight services to avoid duplication and now these services are only subjected to provincial sale tax," he said.
The committee recommended to the government; (i) to maintain zero rating on dairy and milk products; (ii) to reduce customs duty on phthalic anhydride, H.S. Code No 2917.3500 from 16% to 11 primarily because it is a raw material for paint, buttons and plasticizers industries; (iii) provide a level-playing field to both commercial importers & industrial importers and there must be a reasonable differential of income tax between them. Presently, a 6% fixed withholding tax is imposed on commercial importers and industrial importers; they are subject to normal taxation with minimum 1% on turnover as some industries misuse this facility; (vi) exempt agriculture machinery from sales tax and waive off 10% GST on purchase of tractors; (v) maintain zero rate for rice export and provide sales tax exemption to them on import of machinery given the fact that rice as second largest export sector was badly affected for last two years and such a facility would boost exports and agriculture sector; (vi) to review increase of tax duty (55 paisa per kg) on Cement Industry; (vii) educational stationery should continue to be zero-rated from sales tax under the Fifth Schedule to the Sales Tax Act, 1990, and their inputs should also be zero-rated from Customs Duty by placing the items in chapter 99 of Pakistan Customs Tariff, or, in the Fifth schedule to the Customs Act, 1969.
The committee also suggested that following amendments may also be made in Fifth Schedule to the Customs Act 1969, para 22 (i) & (ii), these have already been agreed by FBR;(i) SMD/LED/LVD lights with or without ballast, fittings and fixtures with code 9405.1090; (ii) SMD/LED/LVD street lights with or without ballast, fittings and fixtures with code 9405.4090.
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