The Capital Gain Tax (CGT) relaxation to the bourses and real estate sector till 2008 has been given to encourage inflow of foreign direct investment (FDI) in the country. These views were expressed by DG, RTO, Asrar Rauf while addressing a post-budget seminar organised by Institute of Cost and Management Accountants of Pakistan here on Tuesday.
He said there had been a huge influx of FDI in the country and if any such tax was imposed the investors' sentiment would be hurt and their focus would be diverted. He said the Federal Budget 200-08 was an industrialist-friendly budget that had brought incentives for the industry, adding the main objective of the CBR was to facilitate the taxpayers.
Asrar Rauf said it was due to this facilitation that their collection had reached Rs 835 million and the target for the coming fiscal year had been set at Rs 1.025 billion. He said the budget had allocated Rs 520 billion under PSDP, which would generate millions of direct and indirect employment besides, allocations for other social sectors were also satisfactory.
Later, responding to the queries of Business Recorder, he said although there had been demands from the cellular operators to waive the SIM activation tax of Rs 500 on every connection issued, the tax would be continued. "Cellular business is growing apace and the continuation of this tax would have no affect on the sector," he justified.
About the 15 percent GST on the import of computer hardware components, he said there was no plan to withdraw the tax in the current fiscal. However, it may be gradually reduced after that.
It may be mentioned here that the importers and assemblers of computers and PC/servers had been demanding of the government to withdraw the 15 percent GST, as this had been adversely affecting the IT sector. Instead of removing this tax, the government imposed 1 percent import surcharge.
Commenting on this issue, Asrar Rauf said that 1 percent import surcharge had been imposed but the 6 percent income tax had been reduced to 5 percent, therefore, there would be no difference.
FPCCI Vice-President Zubair Tufail regretted that the proposal of gradual reduction of 15 percent sales tax to 10 percent was not considered, as this had been an incentive for the industrial sector.
He said that no incentive was given to the industrial sector, instead 1 percent surcharge on the import of raw material was another blow to the already under-pressure industrial sector. He proposed that this surcharge could be imposed on the import of consumer products, as this would encourage the local manufacturers. It may also be imposed on luxurious items. Other experts also highlighted various features of the federal budget.