Senate panel backs move to collect GST from former Fata, Pata

ISLAMABAD: The Senate Standing Committee on Finance has unanimously recommended for approval and collection of GST from erstwhile FATA/PATA areas and refrain from backing out at the time of approval of the budget from parliament.

It was interesting to witness that while senators belonging to PTI were staunch supporters of the imposition of 10 percent GST on industrial units located in FATA/PATA areas, in the National Assembly’s Standing Committee on Finance, MNAs belonging to the same party opposed its imposition.

The Senate Standing Committee on Finance and Revenues held its meeting under chairmanship of Saleem Mandviwalla here at the Parliament House on Tuesday in which Senator Mohsin Aziz from PTI stated that there were four major beneficiaries of this GST exemption for industries of FATA/PATA and he knew how this exemption was kept intact at the last moment of the previous budget for 2024-25. 

He was of the view that the lobbyists were still roaming around the parliament, but let’s make a commitment that the government would not back out of the imposition of this tax. He said a special committee was constituted, which had recommended 12 percent GST for the FATA area, but the government proposed it at a rate of 10 percent GST. “If you are going to drop it again, please do inform us here because I don’t want embarrassment again from those who are well entrenched and connected,” Senator Mohsin Aziz said.

The senators also opposed the FBR’s move to increase the reduced rate of 12.5 percent GST to 18 percent for 850cc vehicles in the budget. The Chairman FBR, Rashid Mehmood Langrial, said that the IMF placed a principle that wherever the reduced GST rate was 5 percent, it would go up to 10 percent, and any rate of over 5 percent would go to the standard rate of 18 percent. 

Minister for Finance Muhammad Aurangzeb stated that under the direction of Prime Minister Shehbaz Sharif, the government would incorporate four major safeguards for allowing arrests on tax frauds to avoid misuse of powers. In the first pre-requisite, the minister said that the accused of tax fraud would be arrested where there was a fear of his escape, but it would be done with the approval of three members of the Board, in Grade 21, notified by the FBR. 

The tampering of proof could be the second reason, and the third reason could be tax fraud amounting to Rs50 million. The fourth condition of the arrest, he said, would only be possible if someone received three notices but not bothered to respond. Later, during the NA Standing Committee on Finance held under the chairmanship of Syed Naveed Qamar here, the FBR shared its plan to expand its enforcement plan for bringing 3 million retailers into the tax net. He said that the FBR will extend the Tier-1 retailers regime to large retailers. 

The stringent requirements with opportunity of safeguards will be placed, and all those who do not get themselves registered their utilities will be blocked besides freezing of bank accounts, attachment of properties, sealing of premises, and appointment of a receiver. 

MNA Nafisa Shah from the PPP stated that the FBR was moving towards measures like martial law and taking very tough measures against businesses. On this, the chairman FBR said that tax matters did not have any relation with martial law, as he served as a civil servant under the democratic regime. He further said that there was a potential to bring one million retailers into the tax net.