ISLAMABAD, Nov 12: While people are still reeling from the shock of an added burden of 15 per cent general sales tax on over 70 categories of items, the government has decided to continue to exempt household and personal property, including vehicles, of the rulers of Gulf states from the tax. This exemption is on the items the Gulf sheikhs will import to Pakistan.
When asked about this 'discrimination', a senior official of the Federal Board of Revenue said the Gulf rulers had been given exemptions under an agreement as they had developed infrastructure like rest houses and roads for hunting in various parts of Punjab, Balochistan and Sindh.
“There is no decision to withdraw the exemptions because this is a commitment with the Gulf sheikhs who invest in Pakistan. We will continue with it,” the official said, adding similar exemptions were also given to the United Nations, charitable organisations and diplomats. The Reformed General Sales Tax Bill, introduced in the National Assembly and the Senate on Friday, proposes a 15 per cent GST on all pharmaceutical products, except life-saving drugs to be specified by the FBR. However, the government has allowed tax exemptions on contraceptives and accessories.
According to the FBR official, the tax exemption has been withdrawn on the local supply of five zero-rated sectors -- textiles, carpets, sports, surgical and leather. However, it was not yet decided whether or not to continue with the existing zero-rated facility on export, he added.
The bill proposes a single GST rate of 15 per cent on all items instead of the earlier rates ranging between 17 and 25 per cent, by expanding the tax net.
The FBR expects to generate Rs20-Rs25 billion in the first year of RGST implementation.
The government has introduced 15 per cent GST on computer software, building blocks of cement, tractors, bulldozers, combined harvesters and components imported in any kit form, import and supply of fully-dedicated CNG Euro-2 buses whether in CBU or CKD condition, supply of agriculture implements, bread prepared in tandoors and bakeries, vermicelli, naan, chapatti, sheermal, bun and rusk.
About GST on baked, cooked and prepared food, the FBR official said the government had increased the threshold from Rs5 million to Rs7.5 million.
The government has proposed a 15 per cent GST on seeds, fruit and spores of a kind used for sowing. Other items on the list are: cinchona bark, sugar beet, sugarcane, milk preparations, poultry and cattle feed, surgical tapes, ultrasound gel, glass bangles, currency notes, bank notes, shares, stocks and bonds, bricks, gold and silver in un-worked condition, monetary gold, incinerators of disposal of waste management, motorised sweepers and snow ploughs, aircraft, ships of gross tonnage exceeding 15 LDTs, defence stores, spare parts and equipment for aircraft and ships, equipment and machinery for pilotage, salvage or towage for use in ports or airports, equipment and machinery for air navigation, equipment and machinery used for services provided for handling of ships or aircraft in a customs port or customs airport, goods and services purchased by non-resident entrepreneurs and in trade fairs and exhibitions.
Exemption from payment of GST has been withdrawn on the local supply of cottonseed exclusively meant for sowing purposes, supplies made by cottage industry, raw material and intermediary goods manufactured or produced and services produced, foodstuff cooked or prepared in house and served in messes run on the basis of mutuality and industrial canteens for workers, foodstuff and other eatables prepared in the flight kitchens and supplied for consumption onboard in local flights, agricultural produce of Pakistan not subject to any further process of manufacture, supply of ware potatoes and onions.
There will be no tax on agriculture produce, but if sales by middlemen exceed Rs7.5 million it will be taxed.
The government proposed to continue GST exemptions on unprocessed peas, pulses, rice, wheat and wheat flour; live animals, including live poultry; meat of animals; fish and crustaceans; eggs; live plants including bulbs and roots; food items, excluding bottled, canned or packaged under brand names; edible vegetables; edible fruits, excluding imported (except from Afghanistan); red chillies; ginger; turmeric; fruit juices; ice and water; table salt; cereals and products of milling industries; books (including brochures, leaflets and similar printed matter, children's picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals other than material wholly or predominantly devoted to advertising.