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Friday March 29, 2024

Govt withdraws amendments on offshore companies

By Muhammad Anis
June 18, 2016

62pc of Senate recommendations accepted; sales tax on imported, local tractors cut from 10 to 5pc; customs duty on harvesters, planters waived off; pesticides exempted from sales tax; GST on urea being lowered from 17pc to 5pc; sales tax on import of machinery and equipment for dairy sector cut from 17pc to 5pc; customs duty on SIM cards, smart card manufacturers being lowered from 20pc to 5pc

ISLAMABAD: Finance Minister Senator Muhammad Ishaq Dar on Friday announced the government’s withdrawal from amending the Income Tax Act under which the Pakistani nationals would have been legally bound to give details of their offshore assets to the Federal Board of Revenue (FBR).

Winding up the budget speech in the National Assembly, Dar announced a further increase in the salaries of government employees by merging another ad hoc relief saying that the actual increase in salaries would be 13 percent instead of 10 percent.

He said after the merger of two ad hoc reliefs of 7.5% each, including that of last year and 10% ad hoc relief in the running basic, a raise of 10% will be given. “With this step, the total raise will be 13%,” he said.

Previously, the finance minister in his budget speech had announced the merger of two ad hoc reliefs of 7.5% each and 10% in running basic salaries.

He said the rates of compensation allowance in lieu of residential quarters for personnel of armed forces had also been increased. The Rs592 allowance has been increased to Rs800, Rs900 to Rs1,215, Rs1,142 to Rs1,542 and Rs1,704 to Rs2,300.

Dar told the House that a decision on increase in salary and allowances of parliamentarians would be taken after consultations with the prime minister after his return from London.

The minister talked about economic gains of the government and said in order to consolidate them, the country needed political stability.

“The national political leadership is present in the two houses of parliament and it is their responsibility to serve the national interest living above any personal interests,” he said.

He said after securing macro-economic stability, the government was now focusing on the GDP growth rate.

Dar said since Pakistan was an Islamic nuclear state, it was target of the government to make the country economically sovereign. He also came down hard on the past governments for heavy borrowing during the period between 1999 and 2013.

“There has been an increase of Rs1,200 billion in total borrowing in 14 years from 1999 to 2013 and the then governments can tell about this heavy borrowing,” he said.

He dispelled the impression that the government had resorted to more borrowing than the past and pointed out that only Rs4,850 billion was added to the overall debt.

“There was an increase of Rs2,854 billion in loans during Musharraf’s tenure and over Rs8,500 billion during the era of the last government. We spent loans on economic growth while the previous government should tell on what basis huge loans were secured,” he said.

He regretted that the ongoing energy crisis and poor infrastructure testified to the fact that loans were wasted and not spent on economic growth.

About the NFC Award, he said the last award would remain in practice till announcement of the new one. He said the new NFC Award would also be announced in near future in consultation with the provinces.

He said there was no discrimination in implementing the China Pakistan Economic Corridor (CPEC) projects in all the provinces. He said the CPEC would be a game changer, which would result in the spread of road networks all across the country.

He said the government had accommodated as many as 86 recommendations forwarded by the Upper House for incorporation into the Finance Bill 2016-2017.

He said the Senate had forwarded 139 recommendations for incorporation into the budget document, out of which 86 were approved by the government, which was 62 percent of the total recommendations and a record in the parliamentary history of Pakistan.

Giving the break-up, he said out of 86 proposals, 34 were accepted in totality while 30 were approved in principle with the remaining 22 approved partially while implementation of 53 proposals was not possible.

He regretted that some circles gave wrong statistics creating doubts about the budgetary figures. “It has become a fashion among some circles now to doubt statistical figures, which is not a good practice,” he added.

He said the Pakistan Bureau of Statistics (PBS) had been set up by passing an Act of Parliament and the chief statistician was administered oath by the president.

He dispelled the impression that the budget 2016-2017 would result in price hike.

To support his argument, he said the present inflation rate was less than 3% compared to 25% in 2008 and 12% during the five-year tenure of the previous government in 2008-2015.

“Now you can judge whether there has been price hike or not during the last three years,” he said, adding that there was stability in the prices of commodities.

He said fiscal deficit had also been reduced from 8.4 percent to 4.3 percent during the past three years and the government wanted to bring it down to 3.8 percent during the current fiscal year.

Dar also announced more incentives and relief for agriculture, dairy and IT and telecom sectors.

Sales Tax on imported and local tractors has been reduced from the existing 10 to five percent. Customs Duty on harvesters and planters has been waived off besides abolition of Sales Tax on laser land levelers.

Pesticides have been exempted from Sales Tax while GST on Urea fertilizer is being lowered from the existing 17 to 5%.

Dar announced that relief and incentives being offered on fertilizer and other machinery related to agriculture would become effective as soon as the president gives his assent to the Finance Bill. He said the president was expected to do so on June 22.

Rate of Sales Tax on import of machinery and equipment for dairy sector have also been reduced from 17% to 5%.

With a view to promoting high-tech industry, Customs Duty on SIM cards and smart card manufacturers is being lowered from the existing 20 to 5%.

Shariah compliant companies, approved by the State Bank, would get 2% rebate in Income Tax in order to encourage Islamic banking.

Dar said rate of withholding tax on cable operators in rural areas would be reduced.

He said the FBR would not deduct tax from the bank account of taxpayers until final decision of the appeal in the case.

Similarly, the decision of Alternate Dispute Resolution Committee would automatically become applicable if the FBR does not take a decision within 90 days of the verdict by the committee. Dar said these and other measures announced earlier would make the budgetary proposals pro-growth.

He also responded to points raised by the members during the general debate on the budget. He dispelled the impression that the government resorted to more borrowings than the past.

The minister said except High Speed Diesel, GST on other POL product was less than what it was in March 2013.

He said the government was laying due emphasis on the hydel power generation and had allocated Rs32 billion for the Diamer Bhasha Dam, Rs61 billion for Neelum Jhelum project, Rs42 billion for Dassu and Rs16.5 billion for Tarbela Extension Four project in the next budget.

He said necessary focus was also on the CPEC, especially on its Western Route.

The minister said Rs100 billion had been allocated for rehabilitation of temporarily displaced persons (TDPs). He said Rs145 billion had been spent on Zarb-e-Azb and on TDPs during 2014-2015 and 2015-2016.

He also dispelled the impression that the budget focused on projects for one province and pointed out that huge allocations had been made for infrastructure development and power generation in Sindh, a network of roads and development of Gwadar in Balochistan, health and infrastructure facilities in KPK and projects in different spheres of life in Azad Kashmir and Gilgit-Baltistan.

He said that on the recommendation of Pemra, regulatory and custom duty on reception apparatus for receiving satellite signals, TV broadcast transmitters and top boxes was being reduced from 35% to 11% in order to encourage the electronic media to move towards digitalization.

Naeema Kiswar of JUI-F also endorsed the Senate recommendation that the budget should be discussed in the committees before its actual presentation.

She said the minimum wage of Rs1400 was not sufficient so it may be increased further.

S.A. Iqbal Qadiri of MQM said the Senate recommendations had utmost importance despite the fact that the Upper House had no role in the Finance Bill. He said the Senate had forwarded 147 recommendations and these should be seriously considered.

Sahibzada Tariqullah of JI appreciated the recommendations given by the Senate and said all of them about the Public Sector Development Programme (PSDP) should be shared with the parliamentarians before finalization.