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ISLAMABAD: Senate Standing Committee on Finance Thursday supported imposition of 17 percent sales tax on goods imported by the diplomats and diplomatic missions, but unanimously rejected withdrawal of sales tax exemption on baby formula milk, donations and contraceptives under the Supplementary Finance Bill 2021.

During the review of the Supplementary Finance Bill 2021, here on Thursday at the Parliament House, the FBR Member Inland Revenue (Policy) informed the committee that the baby formula milk is a luxury item. Its price ranges between Rs600 to Rs14,000 per packet. The FBR will propose to provide subsidies to the people after imposition of 17 percent sales tax on baby formula milk.

The government has identified persons under the Ehsaas program and targeted subsidy would be provided to the poor people, the FBR Member said. Senator Kamil Ali Agha stated that on the one hand, the government is issuing health cards and on the other imposing sales tax on milk.

Senator Mohsin Aziz said that the taxation of milk is against the vision of the prime minister for not imposing taxes on milk for children. The FBR Member stated that sales tax has been imposed on the goods imported by various agencies of the United Nations, diplomats, diplomatic missions, privileged persons and privileged organizations which are covered under various Acts and, Orders, rules and regulations made thereunder; and agreements by the federal government.

Responding to this, Senator Saleem Mandviwalla questioned whether sales tax on goods imported by diplomatic missions would be against the international treaties and agreements. The committee, unanimously, rejected the proposed 17pc sales tax on formula milk and other products of a common good, stating that such a sales tax affecting the growth and health of infants will bring shame to the country at the national level.

Finance (Suppl) Bill: 17pc GST proposed to be levied on over 150 items

Senator Kamil Ali Agha stated that the Federal Board of Revenue (FBR) is a malicious entity, “It collects 450 billion rupees annually through various taxation regimes.” The chairman committee showed his intent to form a committee to examine the tax collectors and inspectors as to where these millions of rupees come from, while their salaries would be Rs1 lakh, said the chairman of the committee.

The committee gave clause-wise reading of the bill and thoroughly debated on each point in the larger interest of the general public. The committee reserved discussion on several clauses on account that the data and statistics may be provided on the revenue generated on the previous regime, so that it can be studied minutely to understand the rationale behind the proposed amendments.

Earlier in the meeting, the DRAP representative informed as discussed in the previous meeting that the prices of the registered drugs will not be increased according to the new GST regime. The DRAP informed that the drugs of therapeutic value prices will not be increased; however, the drugs of nutritional value will increase by 17pc sales tax.

The committee observed that the solar panels have also been taxed at 17 percent, taxes are also being levied on imported bicycles. The committee proposed non-imposition of tax on up to 25,000 imported bicycles and imposition of duty on more than 25,000 imported bicycles.

The 17 percent duty on goods for donation to hospitals, educational institutions, and other entity are also going to be imposed, Member FBR informed the committee. Senator Sherry Rehman, while expressing her reservations said people will stop donating such goods to hospitals, schools, and other institutions.

The committee rejected the proposal to impose a 17 percent tax on donations giving arguments stating that, if I donate a machine to a hospital and I have to pay tax on it, I will be reluctant to donate it. The committee also rejected the proposal to impose a sales tax on contraceptive drugs.

Contraceptives were exempted from tax in previous finance bills, but are now being brought into the tax net, says FBR member. The committee rejected the proposal to bring contraceptives into the tax net.

The meeting was attended by Leader of the House in the Senate, Dr Shehzad Waseem, Zeeshan Khanzada, Farooq Hamid Naek, Saleem Mandviwalla, Sherry Rehman, Mohsin Aziz, Kamil Ali Agha, Musadik Masood Malik, Dilawar Khan, Anwarul Haq Kakar, Faisal Sabzwari, and Faisal Saleem Rehman. The chairman FBR, member FBR, and senior officials of the attached departments were also in attendance.

Copyright Business Recorder, 2022

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