ISLAMABAD: The Senate Standing Committee on Finance on Friday approved proposed amendment in the Petroleum Products Surcharge Ordinance, 1961 to allow the federal government, petroleum development levy collection in sales tax mode under the Sales Tax Act 1990.
The government has estimated Rs450 billion collection on account of petroleum development levy for the next fiscal year.
The petroleum levy on imported petroleum products is collected under the Customs Act, 1969, petroleum products produced in Pakistan, petroleum levy is collected under the Federal Excises Act, 2005, said an official.
A meeting of the Senate Standing Committee on Finance presided over by Senator Farooq H Naek was told by the officials of the Petroleum Division that the government has been unable to collect petroleum levy in the federal excise mode, and therefore, amendment in the Petroleum Levy Act was proposed to collect levy in sales tax mode to realise the collection on account of petroleum levy.
In the Petroleum Products Surcharge Ordinance, 1961, in Section 3A, (a) In sub-section (2), in clause (b), after the figure "2005", the expression "or general sales tax payable under the Sales Tax Act, 1990" shall be inserted; and (b) In sub-section (3), after the expression "(IV of 1969)," the expression "the Sales Tax Act, 1990" shall be inserted, Finance Bill 2020 said.
Later, an official told media that once the changes in the law through Finance Bill 2020 were approved from the National Assembly, the Federal Board of Revenue (FBR) would collect levy in sales tax mode and deposit it to the Petroleum Division.
The committee also directed the Finance Ministry to upload online version of budget in brief in original form after Senator Ayesha Raza Farooq pointed out that budget in brief online version was different from the hard copy provided to the senators, and laid in the parliament.
She added that changes in the online budget in brief version were tantamount to compromising the transparency because some of the columns had been removed in the soft copy available at the Ministry of Finance website.
Upon this, the committee gave ruling that "Ministry of Finance should upload original documents of budget in brief without abridging any item".
Other senators also expressed serious reservation over removal of some portion of budget in brief in the online version.
However, officials of the Finance Ministry stated that some changes have been made because of mistakes and duplication, and has nothing to do with transparency.
Hamid Ateeq Sarwar, Member Policy FBR said that 10 withholding tax, as per agreement with the World Bank (WB), would be abolished in the budget for the next fiscal year and 15 more would be abolished in budget for 2021-22.
He said that in three years time as per agreement with the WB, government is required to bring down the withholding taxes to total 25 from 48 for ease of doing business and reduce the cost.
The committee, however, stated that any international agreement must be ratified by the Parliament and is meaningless without ratification.
Members of the committee stated that Ministry of Finance must be asked to place before the committee agreement with the WB related to abolish withholding taxes.
We should ask the secretary finance to provide the copy of the agreement to the committee, some senators suggested to the chair.
Meanwhile the committee delayed approval of proposed duty reduction on over 1,600 tariff lines with observation that we will decide about this item (tariff lines) on Monday.
The Standing Committee on Finance, Revenue and Economic Affairs has outrightly rejected the amendments made in the Income Tax Ordinance 2001 relating to the Taxpayers' Profile, appeal to Appellate Tribunal, offences and penalties, and power to enter and search premises and the FBR powers to have real time access to information and databases of the Federal Investigation Agency (FIA) and the NADRA.
The Standing Committee on Finance, Revenue and Economic Affairs in its meeting held on Friday took up the Finance Bill 2020, containing the annual budget statement presented in the House on 12 June, 2020.
Review of the Income Tax Ordinance, 2001 and Federal, Excise Provisions of Finance Bill, 2020 was completed.
Amendments recommended by the Committee in the Public Finance Management Act 2019 were carried out and shared with the committee.
After detailed deliberations, the committee rejected the FBR's real-time access to information and databases of various authorities such as the NADRA, the FIA, and the provincial excise and taxation departments.
Chaired by Senator Farooq Hamid Naek, the meeting was attended by Senator Mohsin Aziz, Senator Zeeshan Khanzada, Senator Musadik Masood Malik, Senator Mian Muhammad Ateeq Sheikh, Senator Senator Talha Mehmood, Senator Ayesha Raza Farooq, and senior officers from the Ministry for Finance, Revenue and Economic Affairs, Ministry of Commerce and the FBR.
The committee deliberated over restriction on deduction of profit on debt payable to associated enterprises.
Agreements for the avoidance of double taxation and prevention of fiscal evasion were discussed as well.
Special concessions have been awarded to items that are essential during the COVID-19 pandemic.
The committee appreciated the measures taken by the FBR to deal with vast consequences of the pandemic.
The omission of collection of advance tax from dealers, commission agents and arhatis etc., by market committees was welcomed.
This is an important measure to promote agriculture in the country.
Advance tax on education-related expenses has been omitted as well.
In an attempt to discourage the use of caffeinated drinks, the Federal Excise Duty (FED) has been increased from 13 percent to 25 percent.
The imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes have been subjected to FED at 100 percent.
The committee strongly rejected the amendments to the Taxpayers Profile, Appeal to Appellate Tribunal, Offences and Penalties and Power to Enter and Search Premises. Clauses related to Real Time Access to Information and Databases have been disapproved as well.
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