ISLAMABAD: The Senate Standing Committee on Finance on Thursday rejected the government proposals to tax markup on Provident Fund (PF), lowering of benchmark for charging withholding tax on electricity bills and declaration of business account.
The committee, led by its chairman Senator Talha Mehmood, approved the tax machinery’s proposal to abolish tax exemption on pensions and allowances of government employees.
Continuing discussion on the Finance Bill 2021 for the third-day, committee members rejected the proposal of withholding tax on non-filers’ electricity bills exceeding Rs25,000 per month.
Similarly, the recommendation of tax on markup of more than Rs500,000 for PF was also rejected.
Senator Mehmood said the declaration of business bank account will create problems. Senator Farooq Naik said that punishment and fine should be imposed for intentional concealment of business bank. The committee did not approve this proposal of the government. The minimum fine will be Rs0.1 million and imprisonment.
The committee summoned officials of the Ministry of Industries and Production and Engineering Development Board on reduction of taxes on vehicles up to 850cc.
Senator Saleem Mandiwalla said Pakistan was a country that produced the most expensive cars and a poor man could not even think of buying a car.
“There is no mechanism for car prices here. Even today, there is no complete production of vehicles at the local level,” he said.
Senator Mohsin Aziz commented that car manufacturers have been playing with this country for 20 years.
Senator Naik and other members expressed their displeasure when representatives of various businesses approached the committee seeking tax exemptions. He said the salaried class and common people were contributing maximum taxes.
On the occasion, the Federal Board of Revenue (FBR) briefed the committee that exemptions on corporate sector were withdrawn in line with the recommendations of the International Monetary Fund. It was further said that the government will abolish tax on import of point-of-sale machines and these accessible to retailers for duty-free import.
Similarly, duty will be exempted on the import of card reader machine (used for credit/debit cards) and banks will be allowed duty-free imports.
The committee decided to summon the Drug Regulatory Authority of Pakistan on the issue of medicines prices to get an assurance that reduction in duty on raw materials would result in decrease of pharmaceutical rates.
On the issue of the 2019 tax amnesty scheme and people who were unable to pay the fourth installment, Senator Naik suggested to make an amendment in the Act to provide the facility.
The committee unanimously approved proposals to reduce duties on chemicals for food processing and change the duty structure to promote Euro-V vehicles in the country.
The committee approved capital gains tax on property, tax on gifts to blood relatives and tax exemption on transfer of inherited property.
It further okayed tax rebate on turnover of Rs400 million, to investigate income and assets for non-resident Pakistanis, option of electronic appeals, to issue tax exemption to companies within 15 days, 1pc tax on export of services, to maintain 4pc super tax on banks and tax on cars’ on-money.
Published in Dawn, June 18th, 2021