AVN 61.87 Decreased By ▼ -0.08 (-0.13%)
BOP 10.30 No Change ▼ 0.00 (0%)
CHCC 136.00 Decreased By ▼ -0.03 (-0.02%)
DCL 9.85 Increased By ▲ 0.10 (1.03%)
DGKC 108.61 Increased By ▲ 0.43 (0.4%)
EFERT 67.99 Increased By ▲ 0.29 (0.43%)
EPCL 32.35 Increased By ▲ 0.60 (1.89%)
FCCL 21.56 Increased By ▲ 0.04 (0.19%)
FFL 13.86 Increased By ▲ 0.23 (1.69%)
HASCOL 13.91 Increased By ▲ 0.05 (0.36%)
HBL 128.03 Decreased By ▼ -1.22 (-0.94%)
HUBC 81.75 Increased By ▲ 0.10 (0.12%)
HUMNL 9.35 Increased By ▲ 0.08 (0.86%)
JSCL 17.46 No Change ▼ 0.00 (0%)
KAPCO 24.55 No Change ▼ 0.00 (0%)
KEL 3.84 Increased By ▲ 0.02 (0.52%)
LOTCHEM 13.14 Increased By ▲ 0.02 (0.15%)
MLCF 36.86 Increased By ▲ 0.32 (0.88%)
OGDC 113.81 Decreased By ▼ -0.15 (-0.13%)
PAEL 35.51 Increased By ▲ 0.23 (0.65%)
PIBTL 11.82 Increased By ▲ 0.12 (1.03%)
PIOC 91.55 Increased By ▲ 0.25 (0.27%)
POWER 10.04 Increased By ▲ 0.10 (1.01%)
PPL 100.21 Decreased By ▼ -0.25 (-0.25%)
PSO 183.50 Increased By ▲ 0.25 (0.14%)
SNGP 53.91 Decreased By ▼ -0.09 (-0.17%)
STPL 11.86 Increased By ▲ 0.15 (1.28%)
TRG 56.07 Increased By ▲ 0.20 (0.36%)
UNITY 13.24 Increased By ▲ 0.45 (3.52%)
WTL 1.58 Increased By ▲ 0.03 (1.94%)
BR100 4,160 Decreased By ▼ -24 (-0.58%)
BR30 21,303 Decreased By ▼ -186 (-0.87%)
KSE100 40,030 Decreased By ▼ -136 (-0.34%)
KSE30 17,297 Decreased By ▼ -128 (-0.73%)
COVID-19 TOTAL DAILY
CASES 283,487 842
DEATHS 6,068 16
Sindh 123,246 Cases
Punjab 94,223 Cases
Balochistan 11,835 Cases
Islamabad 15,214 Cases
KP 34,539 Cases

ISLAMABAD: The Federal Board of Revenue (FBR) Member Inland Revenue Policy, Dr Hamid Ateeq Sarwar, on Monday informed the Senate Standing Committee on Finance that the tax machinery was confident about achieving the revenue collection target of Rs960 billion, set for the first quarter (July-September) of 2020-2021, and likely resumption of economic activity by October would pave the way for meeting annual tax projections.

During the review of Finance Bill (2020-2021), the committee recommended 10 percent increase in pay of government employees, restoration of zero-rating facility for export-oriented sectors, raise in the Federal Excise Duty (FED) on cigarettes, abolition of advance tax on cars up to 700 cc, raise in the computerized national identity card (CNIC) condition limit from proposed Rs100,000 to Rs500,000, abolition of withholding tax on banking transactions, doubling of allocations for health/education, presentation of loan agreements with international donors before the Parliament, and strongly opposed any cut in share of provinces under the National Finance Commission (NFC) award.

Responding to various queries from senators on the achievement of the revenue collection target of Rs4,963 billion for 2020-2021, the FBR Member IR (Policy), stated that the first three months projection trends show expected collection of Rs250 billion in July 2020; Rs250 billion in August, and Rs350 billion in September 2020 due to Covid situation.

During the first quarter of 2020-21, it is estimated that the FBR would be able to collect Rs850 billion.

However, more efforts would be required to move from Rs850 billion to Rs960 billion by the end of first quarter of 2020-2021.

Dr Sarwar said that ideally the FBR had to collect around Rs1, 200 billion in each quarter of the new fiscal year.

The FBR is hopeful the economic situation would improve in October 2020, and consequently revenue collection position would also improve in the second quarter of 2020-2021.

If we divide the annual target of Rs4, 963 billion in four quarters, the estimated revenue required, comes to approximately Rs1, 250 billion per quarter.

Keeping in view the current Covid-19 situation in the first quarter, there will be estimated shortfall of Rs300 billion during first quarter of 2020-2021, if we compared the estimates with the Rs1, 250 billion estimates for first three months of 2020-2021.

Senator Talha Mahmood disagreed with the projections of the FBR Member IR Policy and stated that Covid-19 situation would not be normalized from October.

He said that he was not saying that the target was not achievable but he was saying that the measures envisaged in the Finance Bill, 2020, would not be instrumental in meeting the assigned target.

The government is confident that the situation would improve in October, but we cannot confirm this with certainty.

Three senators of the Finance Committee including Senator Mohsin Aziz and Mian Muhammad Ateeq Shaikh stated that the revenue collection target of Rs4,963 billion set for the FBR was achievable, whereas Senator Talha Mahmood was of the view that the target was not achievable in view the amendments made in the federal tax laws through Finance Bill, 2020.

This target needs to be reconsidered, he added.

Senator Mohsin Aziz stated that the measures such as construction package, point of sale and other documentation measures would help the FBR in achievement of the assigned target during the next fiscal year.

The FBR Member IR (Policy) further informed the committee that the FBR had suffered shortfall of Rs800 billion due to the Covid-19 impact on economy and lockdown in the country.

If the situation improves from October 2020, the FBR would be in a position to meet the assigned revenue collection target of Rs4, 963 billion for 2020-2021.

"We have been given testing target of Rs4, 963 billion. With the measures specified in the Finance Bill and revival of economy, it would be achieved," he expressed his optimism.

Dr Sarwar said that the telecommunication services and banking sectors had not been affected due to the Covid-19, but our major concern was the large-scale manufacturing witnessing negative growth of six percent.

The slowdown of the large-scale manufacturing sector has serious impact on the FBR's revenue collection.

As compared to other global economies, the impact on Covid-19 on Pakistan's economy is comparatively less.

The committee recommended restoration of sales tax zero-rating facility for the export-oriented sectors or reduction in sales tax rate from 17 percent to a lower rate.

Responding to this, Dr Sarwar stated that there was not a single example in the entire world where domestic sales tax was zero-rated.

Pakistan was the only country in the world, which was offering sales tax zero-rating facility on domestic supplies of leading export sectors.

On local sales, the FBR would be able to collect Rs86 billion by the end of current fiscal year.

So far, the FBR has collected Rs60 billion from local sales and the figure would reach Rs86 billion till end 2019-2020.

The FBR is getting Rs1,700 billion from 17 percent sales tax and when you reduce the rate to four percent, the collection would come down to Rs400 billion.

When the committee members recommended restoration of sales tax zero-rating facility, chairman of the committee, Senator Farooq Naek stated that, "do not recommend something, which cannot be done".

Senator Mahmood observed that the reduction in sales tax rate from 17 to 10 percent would not have any impact, but the reduced rate upto five percent would have some impact on the leading export sectors.

The committee recommended the minimum threshold of CNIC be enhanced to Rs500, 000.

In budget (2020-21), the minimum threshold of supplies by retailers for obtaining CNIC of the buyers is proposed to be increased from Rs50, 000 to Rs100, 000 through Finance Bill, 2020.

The All Pakistan Fertilizer Dealer Association requested the committee to rationalise turnover tax and withholding tax on the fertiliser industry.

Dr Sarwar informed that urea was a highly subsidised sector.

Fertilizer sector is only paying Rs18 to Rs25 per bag of fertilizer as tax.

Five big fertiliser companies are earning huge profits.

They should share their profits with their dealers.

There are around 5,000 dealers and 25,000 sub-dealers of fertilisers.

The government has given all kinds of subsidies to these five big fertiliser companies, but this subsidy should have been given to the farmers.

The dealers are partners of the manufacturers, and they should renegotiate with them instead of taking away share of taxes from the FBR, the FBR member said.

Dr Sarwar said that the issue of withholding tax deduction did not arise in the fertiliser sector, and nobody was asking from the farmers to submit the copies of the CNICs.

Chairman of the Committee Senator Naek recommended that cigarettes of higher value should be taxed more as compared to the cigarettes of lower value.