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16 percent GST on sugar to be levied through Presidential Ordinance
Wednesday, 22 May 2013
The Federal Board of Revenue has proposed 16 percent standard rate of sales tax on sugar in Budget (2013-14). Sources told Business Recorder on Saturday that the FBR has moved the proposal to the Read More . .

16 percent GST on sugar to be levied through Presidential Ordinance

May 22, 2013


The Federal Board of Revenue has proposed 16 percent standard rate of sales tax on sugar in Budget (2013-14). Sources told Business Recorder on Saturday that the FBR has moved the proposal to the Ministry of Finance for consideration in coming budget. The FBR has estimated collection of Rs 10 billion through this major budgetary measure in case the proposal was accepted by the policymakers.
The Board has proposed revision of Federal Excise Duty (FED) rate on sugar. The commodity is currently exempt from sales tax and charged to FED at the rate of 8 percent as compared to all major commodities/products which are chargeable to standard rate of 16 percent sales tax. This preferential treatment to sugar industry resulted in huge revenue loss to the government exchequer.
The FBR has proposed that instead of FED, sales tax at standard rate of 16 percent (or 17 percent as being proposed separately) may be levied, sources added. The government had given tax incentives on the export of sugar by drastically reducing Federal Excise Duty (FED) from 8 percent to 0.5 percent on local sale of sugar equivalent to quantity actually exported by the Sugar mills as per assigned export quota.
In order to boost export revenues, the FBR had incentivised export of sugar by providing a reduced rate of FED leviable on local supply of sugar @ 0.5 percent instead of 8 percent rate leviable on production and supply of sugar. The reduced rate of duty shall only be applicable on the quantity of local sale of sugar equivalent to the quantity actually exported by the sugar manufacturers in accordance with the export quota allotted and shall be available on submission of export proof. The balance local supply shall continue to be subject to Federal Excise Duty @ 8 percent.

Provisional figures: Rs 1.59 trillion revenue collected during July-May 18
Wednesday, 22 May 2013
Tuesday that earlier the FBR has proposed to enhance sales tax on sugar in coming budget (2013-14). Now, the 16 percent sales tax on the commodity would be imposed through the Presidential Ordinance before the announcement of budget. Read More . .

Provisional figures: Rs 1.59 trillion revenue collected during July-May 18

May 22, 2013


The Federal Board of Revenue has provisionally collected Rs 1,591.6 billion during July-May 18 (2012-13) against Rs 1,502.9 billion in same period last fiscal year, reflecting an increase of 5.9 percent. Sources told Business Recorder here on Tuesday that the budgetary target of Rs 2,381 billion was revised downward to Rs 2,191 billion for 2012-13.
The FBR target has been further slashed to Rs 2,050 billion by the end of 2012-13. The Board has to collect Rs 458.4 billion in remaining period of (May-June) 2012-13 to reach figure of Rs 2,050 billion. The current pace of revenue collection revealed that it would be an uphill task to even reach the figure of Rs 2,000 billion by the end of 2012-13.
According to net revenue collection figures compiled here on Tuesday, the Board has provisionally collected Rs 1,591.6 billion during July-May 18 (2012-13) against Rs 1,502.9 billion in same period last fiscal, reflecting an increase of 5.9 percent. Breakup of tax collection during first 18 days of May 2013 revealed that the total collection was Rs 86.23 billion during May 1-18 2013 against Rs 76.78 billion in the same period last fiscal, reflecting an increase of 12.3 percent.
Direct taxes collection during July-May 18 (2012-13) was Rs 576.7 billion against Rs 548.8 billion in the same period last fiscal, showing a growth of 5.1 percent. Sales tax collection was Rs 714 billion during the period under review against Rs 673.7 billion in the same period last fiscal, reflecting an increase of 6 percent.
The customs duty collection was Rs 200.7 billion during July-May 18 (2012-13) against Rs 176.1 billion during corresponding period of last fiscal, reflecting an increase of 13.9 percent. The FBR has paid refunds/rebates of Rs 82.91 billion during July-May 18 (2012-13) against Rs 129.5 billion during corresponding period of last fiscal, reflecting a decrease of 46 percent.

New government won''t impose wealth tax: Dar
Wednesday, 22 May 2013
The PML-N has no intention to impose wealth tax in the 2013-14 budget. "We have no intention to impose wealth tax," PML(N)-designated federal finance minister Ishaq Dar categorically stated Read More . .

New government won''t impose wealth tax: Dar

May 22, 2013


The PML-N has no intention to impose wealth tax in the 2013-14 budget. "We have no intention to impose wealth tax," PML(N)-designated federal finance minister Ishaq Dar categorically stated, squashing reports that the new government had plans to impose wealth tax. At present, Dar is finalising the contours of next fiscal year''s budget.

ST to be charged on basis of printed retail price: Presidential Ordinance to expand scope of Third Schedule
Wednesday, 22 May 2013
Presidential Ordinance to be issued would considerably expand the scope of the Third Schedule of the Sales Tax Act 1990 by including a number of new items Read More . .

ST to be charged on basis of printed retail price: Presidential Ordinance to expand scope of Third Schedule

May 22, 2013


Presidential Ordinance to be issued would considerably expand the scope of the Third Schedule of the Sales Tax Act 1990 by including a number of new items including bottled water and fertilisers for imposition of sales tax on the basis of printed retail price.
Sources told Business Recorder here on Tuesday that the draft of the Presidential Ordinance has proposed amendments to the Third Schedule of the Sales Tax Act 1990. The Finance Ordinance has proposed to charge sales tax on the basis of printed retail price of 22-24 items including paints/varnishes, shaving foam, washing powder, spices having brands names, fertilises, bottled water and paper & paper board, etc.
Through the Presidential Ordinance, amendment has been proposed in the Third Schedule of the Sales Tax Act 1990 to include a large number of items on which sales tax would be charged on the basis of printed retail price. The government wanted to charge sales tax on the basis of printed retail price of these items in order to generate extra revenue from these sectors.
Presently, items chargeable to sales tax at the retail stage included fruit juices and vegetable juices, ice cream, aerated waters or beverages, syrups and squashes, cigarettes, toilet soap, detergents, shampoo, toothpaste, shaving cream, perfumery and cosmetics, tea, powder drink, milky drink, toilet paper and tissue paper, spices sold in retail packing bearing brand names and trade marks and shoe polish and shoe cream.
Sources said that the manufacturers have to pay sales tax on all the stages of value addition of consumer items having printed retail price. Under the Value Added Tax (VAT) regime, the tax is to be paid on value addition attributed to each stage, starting from manufacturing down to retail sale to the end consumer. A number of dealers, distributors and wholesalers of different consumer items are still out of tax net despite efforts to bring the intermediate linkages in supply chain into the taxation system and resultantly the tax actually chargeable at each stage on value addition is not being recovered, sources added.

Revision of FED slabs: Cigarettes makers' proposal now part of Presidential Ordinance
Wednesday, 22 May 2013
The cigarette manufactures have succeeded in incorporating the proposal of their choice in the Presidential Ordinance for revision of Federal Excise Duty Read More . .

Revision of FED slabs: Cigarettes makers' proposal now part of Presidential Ordinance

May 22, 2013


The cigarette manufactures have succeeded in incorporating the proposal of their choice in the Presidential Ordinance for revision of Federal Excise Duty (FED) slabs on cigarettes. Sources told Business Recorder on Tuesday that the cigarette manufacturing units have managed to get their own proposal approved in the Finance Ordinance.
This will allow them to raise prices and increase their own profits without adding any substantial revenue to the government. The original proposal of the Federal Board of Revenue (FBR) dully approved by the Ministry of Finance has not been made part of the Presidential Ordinance. It is yet not clear their how an entirely a new proposal of the cigarette industry has been made part of the amendments to be made in the tax laws through the Finance Ordinance.
As a result of the FBR's proposal, the rate of the excise duty would correspondently increase with the increase in the prices of the cigarettes. This would increase FED collection from the commodity. The FED rates gradually move up with the correspondent increase in the retail price of cigarette. On the other hand, as per new proposal of cigarette manufacturers, the rate of the FED on cigarettes has been fixed. If the prices of cigarettes would increases or decreases, the rate of the FED would not revise due to fixation of the excise duty. The fixed rates of the FED as proposed by the manufacturers have been incorporated in the Presidential Ordinance.
The draft of the Presidential Ordinance on taxation measures to be issued revealed amendment in the First Schedule of the Federal Excise Act, 2005 to revise FED slabs on cigarettes. According to the revised FED structure submitted by the cigarette manufactures to the FBR, the rate of the FED would be Rs 2325 per thousand cigarettes where locally produced cigarettes if their on-pack printed retail price exceeds Rs 2286 per thousand cigarettes. The rate of the FED would be Rs 880 per thousand cigarettes where locally produced cigarettes if their on-pack printed retail price does not exceed Rs 2286 per thousand cigarettes, draft of the Presidential Ordinance said.
The said revised FED slabs on cigarettes have been dully incorporated in the Finance Ordinance to be issued for implementation of the new taxation measures. Contrary to this, the FBR has got approval from Ministry of Finance of entirely different FED structure on cigarettes. The approved proposal has estimated to collect Rs 12 billion from cigarette manufactures. As per FBR's proposal, under first proposed slab, if retail price exceeds Rs 50 for 20 cigarettes, rate of the FED would be 65 percent of the retail price. The second proposed slab reveals that if retail price does not exceed Rs 50 for 20 cigarettes, the rate of the FED would be 25 paisa per stick plus 50 percent of retail price. The existing three slabs have been proposed to be replaced with two slabs of the FED on cigarettes. The existing upper-tier slab, middle-tier slab and lower-tier slab have been merged into two simple slabs of the FED.
Sources said that the FBR had proposed a very simple Federal Excise Duty (FED) structure for levying duty on cigarettes. This proposal was dully approved by the Finance Ministry for revision of the FED slabs on cigarettes. However, a new proposal was recently floated by the cigarette manufactures which was incorporated in the Presidential Ordinance. The new proposal has been added in the Finance Ordinance due to unknown reasons as the FBR's original proposal has estimated to collect Rs 12 billion from the cigarette industry. The new proposal of the industry has also estimated Rs 12 billion from revised slabs but experts opined that the revenue might be much less as estimated by the cigarette manufacturers. The two proposals are entirely different. The FBR's proposal has merged upper-tier slab, middle-tier slab and lower-tier slab have been merged into two simple slabs of the FED. Whereas the new proposal of cigarette manufacturers has replaced the existing serial number nine and ten of the First Schedule of the Federal Excise Act, 2005. The last slab number 11 of FED has been proposed to be abolished by the cigarette manufactures. The method of revision of the FED on cigarettes is also very different when both the proposals are compared, they added.

PTA concerned over FBR's proposal to enhance WHT rates
Wednesday, 22 May 2013
Pakistan Tanners Association (PTA) has expressed its concern over the Federal Board of Revenue's proposal, submitted to the Ministry of Finance, to enhance withholding tax (WHT) rates. While talking to Business Recorder, PTA Chairman Agha Saiddain said Read More . .

PTA concerned over FBR's proposal to enhance WHT rates

May 22, 2013


Pakistan Tanners Association (PTA) has expressed its concern over the Federal Board of Revenue's proposal, submitted to the Ministry of Finance, to enhance withholding tax (WHT) rates. While talking to Business Recorder, PTA Chairman Agha Saiddain said FBR had once again moved a proposal to the Ministry of Finance suggesting upward changes in the rates of WHT in the budget 2013-14.
According to the proposal, he said, the FBR had proposed increase in WHT of commercial imports from five percent to six percent, for export sector from one percent to 1.5 percent and non-corporate exporter one percent to two percent, on contracts of non-corporate from six percent to seven percent, on supplies of corporate sector 3.5 percent to four percent, on cash withdrawal of corporate sector 0.2 percent to 0.3 percent and for non-corporate 0.4 percent.
Agha said the FBR did not take stakeholders into confidence and instead of widening tax net they had adopted traditional way to squeeze those who already paid taxes. He said "any move to add taxes to export sector would be blunder and detrimental to our economy." FBR must realise that due to the energy crisis, impact of war on terror, law and order situation our cost of doing business is highest in the region. Pakistan was losing its ground and competitiveness against regional countries, China, India, Bangladesh, and Sri-Lanka, he said.
PTA Chairman said that export sector must be facilitated to earn foreign exchange for the country and it should not be used for revenue collection as was done all over the world. For FBR, it is easy to collect revenue from export sector in shape of Withholding Tax but it can be done without any increase in this head. FBR might introduce export friendly policies, he said, and urged that FBR must set export targets on higher side. With increased exports, the revenue authorities could raise revenue through previous rate of WHT and country will get foreign exchange on one side and people will get employment on the other. Agha said any increase in WHT of export sector would be extremely short sighted and damaging to our exports.

Curtailing tax losses in energy sector: FBR seeks amendments to ST laws in budget
Tuesday, 21 May 2013
The Federal Board of Revenue has proposed comprehensive amendments to the sales tax laws in Budget (2013-14) to check huge tax losses in energy sector by curtailing sales tax refunds to power sector entities. Read More . .

Curtailing tax losses in energy sector: FBR seeks amendments to ST laws in budget

Tuesday,May 21 2013


The Federal Board of Revenue has proposed comprehensive amendments to the sales tax laws in Budget (2013-14) to check huge tax losses in energy sector by curtailing sales tax refunds to power sector entities. Sources told Business Recorder here on Monday that the FBR has proposed amendments to the Sales Tax Act 1990 and Sales Tax Special Procedure Rules in Budget (2013-14) in this regard.
Three major proposals to check tax losses in energy sector are: Firstly, the input tax adjustment will be proportionate to the output tax generated on the basis of regulated prices. Secondly, restriction of input tax adjustment on transmission and distribution losses by allowing T&D losses as per international standard. Thirdly, disallowing input tax adjustment against theft of electricity and gas.
According to the budget proposal of the FBR received in the Ministry of Finance, the issue is mainly related to the making up of tax losses in energy sector. The proposed amendments would tackle the issue of energy sector which rather than paying any sales tax is net refund claimant.
These refunds accrue for the reason that the price of electricity is required and fixed at less than actual price. The sales tax refunds in power sector also accrue due to huge transmission and distribution (T&D) losses and theft of electricity and gas. Another major reason for accumulation of refunds is due to allowing complete input tax adjustment irrespective whether corresponding output tax is generated or not.
The said position is posing huge loss of tax revenues which is resulting in negative collection of tax from energy sector, sources said. In order to tackle all key sales tax refund related issued in power sector, the FBR has proposed measures in coming budget. The input tax adjustment will be proportionate to the output tax generated on the basis of regulated prices.
There would be restriction of input tax adjustment on transmission and distribution losses by allowing T&D losses as per international standard and input tax adjustment would be disallowed against theft of electricity & gas, sources added. In the past, the Board had received a request from Ministry of Water and Power to release sales tax refunds payable to power sector units. It was brought to the notice of the FBR by the Ministry of Water and Power that the Sales Tax Department is withholding huge amount of refund amounting to Rs 41.072 billion payable to Power Sector Entities.
The unlawful demands are created by resort to audit of Financial Statements of the companies instead of audit of the prescribed record under Section 22 & 23 of the Sales Tax Act, 1990. The tax demands have been raised just on the basis of unwarranted assumptions and presumptions. To facilitate the Power Sector Companies and to alleviate their problems, the concerned authorities may be directed to issue the determined refunds of the Power Sector Entities expeditiously.
On the issue of sales tax on transmission and distribution losses, Ministry of Water and Power had reportedly informed the FBR that such losses are part of the business of the taxpayer. The input tax claimed against the overall generation of electricity, including TND losses (transmission and distribution losses) are meant for the taxable activity and admissible as input tax under the law. Disallowance of input against such losses is not only contrary to the provisions of the Sales Tax Act, but also undue burden on the Power Sector Entities.

New taxation measures: law division vets Presidential Ordinance
Tuesday, 21 May 2013
The Law and Justice Division has vetted the Presidential Ordinance to introduce new taxation measures before federal budget 2013-14. Sources toldRead More . .

New taxation measures: law division vets Presidential Ordinance

Tuesday, 21 May 2013


The Law and Justice Division has vetted the Presidential Ordinance to introduce new taxation measures before federal budget 2013-14. Sources told Business Recorder that the process of vetting the Finance Ordinance has been completed.
If the Finance Ordinance has been signed and subsequently promulgated, it would cover new taxation measures of sales tax, income tax, withholding tax, federal excise duty and customs duty. So far, the draft of the Finance Ordinance has been finalised in consultation with the Ministry of Finance. Presidential Ordinance contains revenue generation measures of direct taxes, sales tax and federal excise duty.

Budget (2013-14): FBR proposes 16 percent GST on sugar
Sunday, 19 May 2013
The PML-N has no intention to impose wealth tax in the 2013-14 budget. "We have no intention to impose wealth tax," PML(N)-designated federal finance minister Ishaq Dar categorically stated Read More . .

Budget (2013-14): FBR proposes 16 percent GST on sugar

Sunday, 19 May 2013


The PML-N has no intention to impose wealth tax in the 2013-14 budget. "We have no intention to impose wealth tax," PML(N)-designated federal finance minister Ishaq Dar categorically stated, squashing reports that the new government had plans to impose wealth tax. At present, Dar is finalising the contours of next fiscal year''s budget.