The Senate Standing Committee on Finance has received as many as 263 recommendations from Senators pertaining to all the sectors of the economy with majority of them related to taxation for making them part of the Finance Bill 2017. The committee meeting presided over by Senator Saleem Mandviwalla held twice a day sittings to discuss these recommendations following in-camera meeting of the committee members to decide which of them are to be recommended to the Senate.
The Senate would forward them to the National Assembly with a request to incorporate them in the Finance Bill. The recommendations are not binding upon the National Assembly. Some of the key recommendations of the Senate Standing Committee on Finance included imposition of Regulatory Duty (RD) on items being imported under Free Trade Agreements (FTAs) for the protection of the domestic industry under Finance Bill 2017. The committee recommended restoration of sales tax zero-rating on basic educational stationery items including pencils, pens, exercise books, sharpeners, etc, as well as reduction in duty on the import of raw materials of can industry making investment in Pakistan.
The finance committee also proposed to increase rate of advance income tax on brokers by 50%, taking it from the current 0.02% to 0.03%. The Senate Standing Committee on Finance not only endorsed the government's proposal to bring a further change in the brokers' regime but also sought increase in collection from the Pakistan Stock Exchange (PSX). In the budget, the government announced that the 0.02% advance withholding tax on the income of stock exchange brokers would be treated as a final tax instead of the existing adjustable regime.
The committee further recommended that the upfront amount should be fixed at Rs 4 billion which the CNG association should pay within the ongoing month while remaining installments would be finalised for next financial year. But the CNG association will have to provide guarantee that they will withdraw cases from the courts. The finance committee disapproved the proposal of the Finance Bill 2017 to include Employees Old Age Benefit Institution (EOBI) in the list of organisations, which can have access to the income tax returns and statements under section 216 of the Income Tax Ordinance 2001.
The standing committee also endorsed the government's proposal to change the capital gains tax rates for the stock market. In the budget, the government proposed that instead of a three-tier tax structure depending on the holding period, stock market gains of filers of income tax returns should be taxed at a flat rate of 15%, irrespective of the holding period. For non-filers, the new proposed rate is 20%.
The standing committee also endorsed the government's proposal to expand the definition of non-resident Pakistanis by including "reportable persons" into it. The committee also recommended 20 per cent increase in government employees' salaries and pensions.
The committee also approved a proposal by Farhatullah Babar for establishment of support fund with initial allocation of Rs 20 billion for the families of those who were martyred in war against terrorism. The committee approved the recommendation by Syed Muzaffar Hussain Shah for abolishing sales tax on import of sunflower and canola hybrid seed. His proposal for fixing unified price for all tube-wells used for agricultural purposes was also approved by the committee. Additionally, his proposal for zero rating the import of food storage and chilling machinery was also forwarded to the National Assembly for approval.
The committee, however, recommended reviewing the proposal of Syed Muzaffar to make the import of tractors from Belarus duty-free in order to protect the local industry. While reviewing the recommendation given by Senator Chaudhry Tanvir, the committee approved the proposal of interest-free loan scheme for small farmers to install solar tube-wells. The committee also recommended cutting allocated budgets for the Presidency and Prime Minister House.
The Senate committee recommended to the National Assembly that income from all sources including salaries, businesses, property and agricultural produce above the taxable limit may be taxed. The Senate committee recommended to the National Assembly that tax on sales/purchases of all sorts of properties ie urban, rural, commercial, industrial and agricultural should be imposed and collected.