FED on cement soon to be applicable

ISLAMABAD: Increase in federal excise duty on cement announced in the budget 2018/19 is expected to be applicable before the start of the next fiscal year, a senior official said on Thursday.

“The rationale behind the immediate increase in FED (federal excise duty) on cement and cigarettes is to discourage profiteers from taking benefit of the proposed increase in FED on these two items,” FBR’s Member Tax Policy Mohammad Iqbal said.

The government proposed increase in FED on cement to Rs1.50/kilogram from 1.25/kg, while increase in FED on cigarette has already been enforced. Iqbal, during a meeting of the senate standing committee on finance and revenues, said the increase in the FED on cement would soon be enforced. He said the changes in regulatory duty and other adjustments in customs duty will become applicable from the next day of assent to be given to the Finance Act 2018 by the President of Pakistan. Iqbal said the income tax and sales tax measures would become applicable from July 1. This would include revenue measures of the income tax and sales tax and legal/procedural changes introduced in the Income Tax Ordinance 2001, Sales Tax Act 1990 and Federal Excise Act. An official of law division told the committee that in the past the government was collecting sales tax and customs duties except income tax from the date of announcement of budget under the Provisional Collection of Taxes Act, 1931. Supreme Court of Pakistan struck down the act. Senator Khanzada Khan said the committee should advise the federal government to withdraw federal budget (2018-19) and instead present the budget for four months period. Senator Ateeq Shaikh said it is strange that a member of the committee is recommending withdrawal of the federal budget, while also making suggestions on the Finance Bill for 2018/19. “If the whole budget for 2018/19 is illegal then why he is giving recommendations,” he asked.

Senator Ayesha Raza Farooq said she strongly opposed the recommendation that the federal budget should be declared as illegal. The constitution does not bar the government from presenting the federal budget for the whole year. “The new government can make changes in the budget and taxes.”