Senate panel approves questioning income sources of frequent travellers while refusing increase in sales tax

FBR protecting power lobbies in tobacco sector: Senators

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ISLAMABAD: Senate Standing Committee on Finance on Thursday approved the rule allowing authorities to question the source of income of those nationals travelling abroad frequently.

During a meeting of the committee which was chaired by Farooq H Naek, the committee approved seeking details about the frequent travellers (passengers) and staff of airlines. The committee also approved seeking additional details from a conveyance that is en-route to Pakistan for the provision of accurate and complete information of passengers in advance to thwart attempts of money laundering and currency smuggling.

“The details about expenditure of passengers being made while their travelling abroad, will ultimately help the authorities to identify the currency smugglers, money launders and tax avoiders. The legislation through the financial bill was proposed by Financial Action Task Force,” said representatives of Federal Board of Revenue (FBR) while defending amendments and new legislation proposed in the Finance Bill 2018.

During the meeting the committee rejected the proposal of collecting taxes before July 1, as FBR officials claimed that there was provision in rules allowing the board to impose the taxes very next day of presentation of budget.

Members of the committee also showed their concerns over the imposition of Rs10 per kg levy on growers of tobacco saying that the levy will hurt the growers. Instead of burdening the growers FBR should increase taxes on cigarette, meanwhile the consumption of cigarette continues to increase in the country.

Senator Mohsin Aziz said FBR should increase taxes on cigarette as the consumption has been increased in the country. “Unfortunately, FBR and others are protecting the powerful lobbies at tobacco companies,” he said.

Through the financial bill, FBR has proposed the levy of excise duty on locally manufactured cigarettes and cement to be enhanced respectively by 6 per cent and 20 per cent. The revised rates are proposed to be effective immediately upon enactment of Finance Act, 2018 and intervening period is proposed to be covered by way of issuance of a notification SRO at the end of April 2018.

During the meeting, majority of the members objected the increase in additional sales taxes on unregistered people saying that there would be over 90 per cent people unregistered in the country. The committee decided to maintain the existing tax addition to the sales tax of 17 per cent. FBR had proposed a tax over and above standard rate of tax chargeable on supplies to persons who have not obtained sales tax registration. This is termed as ‘further tax’. At present, further tax is charged at the rate of 2 per cent. It was proposed to be increased to 3 per cent.

The committee also approved duty concession to standardise printing and preservation of Holy Quran. Custom duty on papers imported for printing Holy Quran is now restricted to paper weighing 60 g/m. Moreover, now Nashir-e-Quran registered with the government can avail such concession as well.

Committee also approved customs duty on specified equipment for the cinema industry reduced to 3 per cent subject to certain conditions.