Senate body rejects uniform GST rate

ISLAMABAD: The senate standing committee on finance has rejected the government’s proposals in the finance bill 2021/22 to apply standard general sales tax rate of 17 percent on gold, diamonds, precious stones, dairy products, bricks, aircraft, plants and machinery, it was learnt on Wednesday.

Senator Saadia Abbasi belonging to Pakistan Muslim League (Nawaz) set the tone of the senate panel whereby she asked the chairman of the committee to write a dissenting note as she could not approve such highly inflationary tax proposals incorporated in the Finance Bill 2021-22.

“The government has hiked tax rates on 279 items and they do not have any realisation that this budget will make the lives of common citizens more miserable. I am answerable to my conscience and to my party and cannot grant stamp approval on such tax proposals. These measures will kill the industry,” Abbasi said.

This was supported by senators Saleem Mandiwalla, Kamil Ali Agha from PML (Q), and Prince Umar Ahmed Zai from Balochistan Awami Party.

Agha said that it seemed that Finance Minister Shaukat Tarin was not fully aware of the tax proposal and he might prefer to quit after fully knowing about such harsh taxation measures.

The Federal Board of Revenue (FBR)officials informed the committee that the exemption on glass bangles, infant milk, boats, aircraft and other items were withdrawn in the budget. The sales tax in value added mode was placed where the whole supply chain for various sectors was brought into tax net, the FBR added.

The representatives of Islamabad Jewelers Association informed the senate panel that the FBR slapped standard GST rate of 17 percent on gold, diamonds and precious stones in the budget. Earlier, the FBR had imposed reduced GST rate of 1.5 percent on gold value, 0.5 percent for precious stones and 3 percent for making services of jewelry. Now the FBR proposed hiking of GST rate to 17 percent.

The FBR has also brought changes into 8th schedule of GST and increased the rate on soybean meal and soybean seeds from 10 to 17 percent. The rate of GST on raw cotton, ginning cotton, plant, machinery to 17 percent. “This is anti-industry move and we will oppose it tooth and nail,” Mandviwalla said.

Faisal Sabazwari from MQM Pakistan said he could not justify that the government was providing tax incentives on capital gain tax but imposing taxes on edible items.

Senate Panel Chairman Taleh Mehmood asked the FBR team to review tax proposals where the tax was jacked up on milk, cream, butter, yogurt and poultry machinery.

The senate panel also considered 12th schedule and recommended bringing down GST rate from 17 to 1 percent on electric vehicle. The committee also endorsed bringing export of services at zero rating regime for Islamabad Capital Territory.