ISLAMABAD: The Senate Standing Committee on Finance has declined the Federal Board of Revenue’s proposal to increase the advance tax on the sale and purchase of property from one to two percent for filers in the budget 2022-23. However, the Senate panel extended its support and approved increasing the advance tax from two to five percent on the sale and purchase of property for non-filers.
The Senate Standing Committee on Finance and Revenues continued its day-long deliberations for finalizing recommendations on the Finance Bill, 2022, here at the Parliament House under the Chairmanship of Senator Saleem Mandviwalla Wednesday.
The committee proposed amendments in the Finance Bill 2022, recommending the government to charge one per cent market value as deemed income tax on plots valuing more than Rs25 million after five years of transfer of land.
Initially, the Senate panel rejected the FBR’s proposal to charge one percent market value on plots valuing more than Rs25 million but in their second thought, they recommended that the deemed income should be taxed if the plot did not construct in five years period.
The Senate panel also proposed amendments in the Capital Gains Tax (CGT) on the holding period and recommended that the holding period of the plot should be reduced from six to five years and revive the existing slabs for payment of CGT.
A meeting of the Senate Standing Committee on Finance has recommended to the Federal Board of Revenue (FBR) to maintain capital gains tax at one percent on disposal of securities and expressed concerns over tax on deemed income of assets (open plots).
As the proceedings of the committee started with Senator Saleem Mandviwalla in the chair on Wednesday, President Islamabad Chamber of Commerce and Industry (ICCI) Sardar Yasir Ilyas Khan raised the issue of measures proposed in the finance bill about the construction sector and contended that if implemented these would have serious implications on the construction industry but would also dampen growth of overall industry primarily because a large number of other industries are either directly working for the construction industry or indirectly associated with it.
The ICCI office bearers also pointed out that in the federal capital alone more than Rs240 billion projects were initiated during the last eight months and now the advance tax for filers has been proposed to be increased from one percent to two percent and for non-filers to five percent.
Of course increase in advance tax on non-filers is understandable with the objective to document them but an increase in advance tax on filers in no way appears justiciable.
The sectors related to home furnishing, decoration, electrical equipment, appliances, electronics, curtains, flooring, kitchenware, cupboards and many more would also be negatively affected as the construction of new houses goes down, Yasir added.
The committee members, Mohsin Aziz, Talha Mehmood, Dilawar Khan, and others stated the proposed measures would have a negative impact on industrial growth and result in more joblessness in the country. The meeting of the finance committee also approved the imposition of levy on mobile phones after it was informed that it is being imposed on high-value mobiles and would yield projected revenue of Rs670 million.
The documented steel sector has asked the Senate Standing Committee on Finance to restore the minimum tax carry forward facility which was withdrawn in the budget (2022-23).
Pakistan Large steel producers informed the Senate Standing Committee on Finance on Wednesday that the minimum tax paid on turnover in excess of normal tax liability (including nil tax due to losses or exemption) was so far available for adjustment against normal tax of subsequent five tax years. This facility of carry forward is now proposed to be withdrawn.
The delegation informed that due to high interest rates, currency devaluation, unprecedented increase in the prices of scrap internationally, drastic increase in electricity prices, the local steel industry is going through a serious crisis. In this situation, there is a need of urgent measures to save the local industry from closure or getting stifled.
The section 8B (1) restricts the adjustment of input tax to the extent of 90 per cent of the output tax in relation to the tax period. Through the Finance Act, 2021, as exception to the above restriction was introduced for public limited companies listed on Pakistan Stock Exchange. The bill now seeks to remove the above exception and public limited companies listed on PSX will also not be able to adjust their input tax, excessive of 90 percent of their output tax for a tax period. Thus, 100 percent input must be allowed to steel sector units regardless of their type individual, AOP, partnership, private limited company or a public limited company.
Officials of the Pakistan National Heart Association told the committee that one in three people in Pakistan is diabetic and the use of beverages is increasing the incidence of obesity, heart disease and cancer, whereas, Pakistan beverage tax is very low as opposed to India and Saudi Arabia.
They added that Pakistan National Heart Association demands the imposition of excise 20 percent duty on sugar-related drinks. The meeting was further informed that there is a 13 percent tax on soda and no tax on juices.
The Federal Board of Revenue (FBR) chairman stated that this tax can be imposed only when the track and trace system is in place and stated that it would take one year to the FBR for putting in place the track and trace system on beverages. He further stated that this proposal to impose tax on beverages is in the benefit of the tax authorities but there is a need to listen to the viewpoint of the industry.
The FBR chairman has again solicited proposals from the representatives of the beverage industry and the Pakistan National Heart Association and invited them in the next meeting in this regard.
Copyright Business Recorder, 2022