ISLAMABAD: The Senate Standing Committee on Finance, Revenue and Economic Affairs on Friday approved 17 per cent sales tax on the import of machinery and equipment to be utilised in the Export Processing Zones (EPZs).

While approving a few proposals, the committee headed by Senator Muhammad Talha Mahmood in its third consecutive meeting on the Finance (Supplementary) Bill 2021 also rejected others on the plea that they will lead to an increased burden on the common people.

The committee also dismissed the 17pc sales tax on solar panels saying it would discourage the use of innovative natural resources for the development of the country.

Rejects tax on solar panels

Senator Talha accepted the invitation of Federal Board of Revenue (FBR) chairman Ashfaq Ahmed for taking a special briefing on the upgraded electronic refund payment system to clear the committee’s apprehensions.

The committee unanimously gave recommendations for the inclusion of insurance guarantee, bank guarantee and cheque for substances registered as drugs and medicaments under the drug Act 1976 and further recommended that the release of guarantee may also be time-bound.

“The refund system of bank guarantees has been accelerated by 98.5pc this year,” the FBR chairman stated while assuring that the apprehensions will prove infructuous.

Responding to this the FBR chairman said the import of sewing machines is being misused by the industrialists. The committee unanimously recommended a change from “household type” to “industrial type”.

He said that the pharma industry standing onRs700bn without a refund system is not comprehended; the refund system is a worldwide practice.

PPP Senator Farooq Hamid Naek said that only time will tell the truth of the consequences of such policies of the government. “Tax imposed on the sewing machines of the “household type” is a clear example of unjust to the class of society, who cannot afford branded clothing and boutiques wardrobes, he further said.

It was also recommended bank guarantee on the oil and steel industry. The committee also sought details from the FBR on the cases pending with regards to the release of guarantees. The FBR assured the committee that the report will be submitted within a fortnight.

The proposed amendment on the customs duties on personal wearing apparel and bona fide baggage imported by overseas Pakistanis and tourists was also unanimously rejected by the committee.

The FBR chairman acknowledged the recommendation on the same and assured to revisit the proposition.

The chairman FBR assured that the FBR is working on levied tax in the agriculture sectors. The chairman FBR stated that he has affirmed with the finance minister on the subject of keeping the modesty of the country intact.The chairman FBR informed the committee that in the erstwhile Fata and Pata areas, the industrialists give postdated bank cheques, most of them were bounced due to low balance in their accounts. He said that Rs150bn tax was still in pending.

Senator Faisal Subzwari also expressed reservations on tax imposition on laptops/computers stating that it is against the idea of Prime Minister Imran Khan’s Digital Pakistan.

The public petition by Vice-Chairman Pakistan Gems Jewellery Traders and Exporters Association Fayyaz Qureshi was referred to the FBR.

The chairman FBR invited all the stakeholders for a public hearing and obtain a single solution on the matter of 17pc sales tax on import gold in unworked condition and articles of jewellery.

“All differences in sales tax should be eliminated in the next five months,” Chairman FBR stated. The committee unanimously agreed on the proposition of fully documenting the matchbox industry, the committee proposed recommendations to increase the fixed tax on match stick material from Rs90 to Rs110 per kg.

On the matter, the committee said that all the industries of these areas should pay bank guarantees.

Published in Dawn, January 8th, 2022