Senate panel rejects some finance bill proposals

ISLAMABAD: The Senate Finance Committee on Thursday backed the imposition of a 17 percent general sales tax on goods imported by diplomats and missions, but unanimously refused to withdraw the sales tax exemption on infant formula, donations and contraceptives under the Supplementary Funding Act 2021 .

On the second day in a row, the Senate committee met with Senator Talha Mahmoud in the chair to finalize and make recommendations on the (Supplementary) Finance Bill of 2021.

The committee gave a paragraph by reading the bill and discussed at length about each point for the general interest of the general public. The Committee reserved discussions on several paragraphs on the grounds that data and statistics on revenue generated in the previous system could be provided so that they could be studied thoroughly to understand the rationale behind the proposed amendments. It supported the imposition of a general sales tax of 17 per cent on goods imported by diplomats and diplomatic missions.

However, the committee unanimously rejected a proposed 17 percent GST on the jewelry industry. The committee unanimously rejected the proposed amendment from 1.5% of the value of gold and 2% of the value of diamonds plus 3% of manufacturing fees to a 17% excise tax on items of jewelry or parts of precious metals. and a sharp decline in state tax revenue, the commission similarly disposed of the matchbox industry’s petition on the proposed amendment to exemption from tax on matchboxes with the directive to keep the previous system of sales tax on the matchbox industry in the same measure to secure the documented industry and increase revenue for the benefit of the state.

The Commission failed to understand the rationale behind the proposed amendment that would result in encouraging the undocumented business industry. The committee noted that the proposed amendment is highly discriminatory as it will only affect companies registered in the sales tax.

The committee found that 80 tons of gold are smuggled into the country annually. The Gold Association lamented that Pakistan does not have a gold import policy and tax system, “not only gold, but diamonds are smuggled as well,” according to progressive jewelry groups. FBR officials informed the commission that 160 tons of gold is used annually in Pakistan, and that the gold market in Pakistan is worth about Rs. 2.2 trillion. From that only Rs. 29 billion gold market announced in the Federal Council of Revenue. Likewise, “out of 36,000 jewelers, only 54 pay the goldsmith tax,” FBR reported.

The committee also unanimously rejected the proposed 17% sales tax on formula milk and other products of public benefit, stating that this sales tax affecting the growth and health of children would bring shame to the country at the national level. FBR member Inland Revenue (Policy) informed the committee that formula is a luxury item. Its price ranges from Rs 600 to Rs 24,000 per pack. The FBR will propose subsidies to people after imposing a 17 percent sales tax on infant formula. The FBR member said the government has identified people under the Al-Ahsa program and that the targeted support will be[proviedtothepoorpeopletheFBRMembersaid].[تقديمهللفقراء[roviedtothepoorpeopletheFBRMembersaid

The Commission unanimously believed that it needed to confirm whether or not the Commission’s recommendations would be recognized, otherwise it would be pointless to spend countless hours debating this issue without progressive results. “If the financial advisor and his team are not present, who are we to make our recommendations to,” said Mosaddeq Malik. The Chairman of the Committee assured the members that he had spoken to the Minister of Finance of the necessity of accepting the recommendations in letter and spirit.

Committee members expressed their frustration with the absence of Federal Minister of Finance and Revenue Shaukat Tarin from the session. Senator Mosaddeq Masoud Malik told the committee that those who presented the supplementary finance bill were absent from the meeting. The Commission also expressed that the integrity of the Commission can be preserved and the attendance of the Minister, the Secretary and other high-ranking officials can be committed, and the dignity and honor of such high-level parliamentary meetings be preserved.

Senator Kamel Ali Agha stated that the Federal Board of Revenue is a malicious entity that “raises 450 billion rupees annually through various tax regimes”. The chairman of the commission expressed his intention to form a commission to examine tax collectors and inspectors to find out the source of millions of rupees, while their salaries would be Rs. The head of the committee said 1 lakh.

Earlier in the meeting, a DRAP representative informed that prices for registered drugs will not be raised under the new GST regime. DRAP has informed that the price of therapeutic value drugs will not be increased but that the nutritional value drug will increase by 17% sales tax. The commission noted that solar panels were also taxed at 17%, as were imported bikes. It proposed eliminating the tax on up to 25,000 imported bicycles and imposing duties on more than 25,000 imported bicycles.

The FBR member informed the committee that a 17% fee will also be charged on donation items to hospitals, educational institutions and other entities. Expressing her reservations, Senator Sherry Rehman said people would stop donating these goods to hospitals, schools and other institutions. The commission rejected a proposal for a 17% tax on donations, arguing “I would hesitate to donate a machine to a hospital that would also be taxed.”

The committee also rejected the proposal to impose a sales tax on contraceptive drugs. Contraceptives were exempt from taxes in previous financing bills, but are now being brought into the tax net, says the FBR member.

The meeting was attended by Senate Speaker Dr. Shezad Waseem, Zeeshan Khanzada, Farooq Hamid Niq, Salim Mandviwala, Sherry Rahman, Mohsen Aziz, Kamil Ali Agha, Masoud Masoud Malik, Dilawar Khan, Anwar Haq Kakkar and Faisal. Sabzuri and Faisal Salim Rahman. The session was also attended by the FBR Board Chairman, FBR member and senior officials of the attached departments.

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