Presidential ordinances instead of the acts of the parliament The government is using all the means at its disposal to mop up cash resources from whatever source it finds including heavy bank borrowings including the printing of currency notes to the dismay of the SBP; and instead of abandoning the luxurious lifestyle of the government, it has now come up with a mini-budget of Rs 52 billion, levying extra taxes which shall be burdened on the already heavily taxed poor people in the country.
On the protests of the textile trade and industry, it was however agreed in the meeting between the FBR and the Aptma that the sales tax rate would be slightly relaxed in case of non-registered persons in the zero-rated supply chain of five export sectors.
At present, the country is faced with an acute energy crisis, gas load shedding, low water level in the rivers, law and order situation, flight of capital owing to regressive taxation policies and risk to life and property of every citizen due to adverse after-effects of the unholy American war of terror being fought by the present regime on the sacred soil of Pakistan. It has destroyed the confidence of investors in the new business adventures, which has ultimately closed the factories, damaged the export market of our products and created unemployment. The day-to-day increase in electricity and POL prices is another practice of the government to add salt to the injury of inflation caused to the common people. The unethical practice of printing of currency notes by the government has created high inflation, which has made life miserable for the poor masses, who voted the present government to power on the fake slogan of roti, kapra aur makan.
In these days of drought when dust is in the riverbeds, the government has imposed a flood surcharge of 15% on tax payable by every taxpayer in the country. This is in fact is a tax on tax on the honest taxpayers. The Waderas, Sardars, Chaudhrys and Maliks including politicians and the feudal lords who posses enormous wealth have been spared. The State Bank of Pakistan (SBP) has said that more than Rs 30 billion is generated as agriculture income by the landed class of the big agriculturists; but they remain out of the tax net. The ex-finance minister Shaukat Tareen had revealed that the tax machinery was so corrupt that tax revenue of Rs 5000 billion is usurped by them. It does not come in the national exchequer. It was the duty of the government to plug the loopholes of revenue leakages and control corruption at all levels of its administration; and devise ways and means to facilitate productive activities in the country.
Under conditionalities agreed with the IMF for the release of second tranche of the aid finances, the government had to introduce Value Added Tax (VAT) Act, 2009 in the last budget but it was deferred till October 01, 2009 and later to introduce it under the label of the Reformed General Sales Tax (RGST), 2010 in the second half of the current fiscal. However, finding it difficult to get it endorsed by the elected representatives sitting in the parliament, the president sought to use his powers granted under the constitution of Pakistan to enforce tax measures through ordinances instead of acts of the parliament. The parliament was ignored on such vital issues. This was an undemocratic move by the president who represents the democratically elected PPP government in the country.
The President of Pakistan in a bid to generate additional revenue for the national exchequer by imposing extra taxes has promulgated three ordinances on 15th of March, 2011 followed by subsequent series of SROs and notifications. These ordinances were neither publicised nor uploaded on the FBR's portal to seek public comments prior to their enforcement.
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1.Federal Excise Duty
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(i) Federal Excise (amendment) FED rate increased from 1% to 2.50% by
Ordinance, 2011 dt. Mach 15, 2011 amendment in Section 3Aof Federal
(ii) SRO 261(I)/2011 dt. March 19, 2011 Excise Act, 2005.
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2. Sales Tax
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(i) Sales Tax (amendment) Ordinance,
2011 dt. March 15, 2011 Sales tax exemption on agricultural
tractors withdrawn.
(ii) SRO 229(I)/2011 dt. March 15, 2011
a) Input tax on agricultural tractors
b) Import and supply of fertilizers Sales tax exemption on fertilizer
withdrawn.
c) Import and supply of pesticides Sales tax exemption on pesticides
withdrawn.
(v) SRO 230(I)/2011 dt. March 15, 2011 Zero percent sales tax omitted on supply
(Supply of goods: a) cotton seeds, b) oil of goods as mentioned in the SRO.
cake, c) plant machinery and
equipment, d) food items, e) stationery,
f) soybean meal, and g) petroleum
production etc.
(vi) SRO 232(1)12011 dt. March 14, 2011 Sales tax @8% on actual sales price
(Sales tax on sugar) subject to uniform price of sugar yet to be
fixed by the government.
(vii) SRO283(I)/201 1 dt. April 1, 2011 i) In case of registered persons:
(Zero-rated and reduced sales tax rates -Zero-rated sales tax on 185 items of
Applicable in the five export sectors goods on conditions as specified under
namely: i) textile, ii) carpet, iii) leather, this SRO.
iv) sports goods and v) surgical goods) ii) In case of unregistered persons:
No sales tax shall be payable at ginning -Purchase/sale shall be chargeable to
or man-made and synthetic fiber sales tax @ reduced rates of 6% & 4%
manufacturing stage. respectively on the conditions as laid
down under the SRO.
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3.Income Tax
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(i) Income Tax (amendment) Tax on tax:
Ordinance, 2011, March 15, 2011 -15% surcharge on tax payable by
(A new section '4A surcharge' has every taxpayer.
been inserted in the income tax By this arrangement 15% surcharge
ordinance, 2001 to impose tax on shall be deducted at source as
tax on every taxpayer under Part V identified under Fart V of Chapter X of
of Chapter X or Chapter XII of the Ordinance on (i) advance tax u/s.
Income Tax Ordinance, 2001). 147 (ii) imports u/s. 148 (iii) salary u/s.
149 (iv) dividends u/s. 150 (v) profit on
debt u/s. 151 (vi) payments to non-
residents u/s. 152 (vii) payments for
goods and services u/s. 153 (viii)
payment to non-resident media
persons u/s. 153A (ix) exports u/s.
154 (x) income from property u/s. 155
(xi) prizes and winnings u/s. 156 (xii)
petroleum products u/s. 1 56A (xiii)
withdrawal of balance under pension
fund u/s. 156B.
Similarly 15% surcharge shall also be
deducted at source as identified under
Chapter XII of the Ordinances on (i)
cash withdrawal from a bank u/s.
231A (ii) advance tax on transactions
in bank u/s. 231AA (iii) advance tax on
private motor vehicles u/s. 231 B (iv)
brokerage and commission u/s. 233
(v) collection of tax by a stock
exchange registered in Pakistan u/s.
233A (vi) transportation business u/s.
234 (vii) CNG stations u/s. 234A (viii)
electricity consumption u/s. 235 (ix)
telephone users u/s. 236 (x) advance
tax at the time of sale by auction u/s.
236A (xi) advance tax on purchase of
air ticket u/s. 236B.
(ii) SRO 1 74(I)/201 I dt. March 05, 2011 In case of flour mills, rate of minimum
(Amendment in minimum tax u/s tax on the amount of turnover shall
113) be reduced by eighty percent.
(iii) Circular 3/2011 dt. April 01, 2011
(WHT in the zero rated supply chain of
export sectors: (i) textile and articles
thereof, (ii) carpets, (iii) leather and
articles thereof including artificial WHT @ 10% on brokerage commission.
leather, (iv) surgical goods (v) sports Final tax.
goods.)
(a) Rate
(b) Taxability status
(iv) Circular 4/2011 dt. April 01, 2011
(Deductibility of withholding tax or
otherwise on the purchase of
agricultural produce) Seed cotton, rice, edible oils, and other
(a) Types of agriculture produce agriculture produce.
(i) No tax if the agricultural produce
Directly sold by the grower I cultivator.
(b) Withholding Tax (ii) 1.5%taxshallbedeductedon
brokerage commission if sold through the
commission agent.
(v) SRO288(l)/2011 dt. April 1, 2011
(Withholding tax on local sales, supplies
or services in the following categories of
sales tax zero-rated taxpayers: (i) textile
and articles thereof, (ii) carpets, (iii)
leather and articles thereof including
artificial leather, (iv) surgical goods (v)
sports goods).
1%
(a) Rate
(b) Amnesty No question shall be asked on the
(new sellers, suppliers, and service amounts credited (unexplained income
providers in the supply chain of and assets) in the books of account
zero-rated sectors to get them maintained upto 30 June, 2011.
registered for the purpose of sales
tax upto June 30, 2011.
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