Senate panel rejects 17pc GST on solar panel systems

ISLAMABAD: The Senate Standing Committee on Finance and Revenues has rejected the imposition of 17 percent General Sales Tax (GST) on solar panel systems and goods being imported by overseas Pakistanis in their personal baggage. The committee asked the FBR to impose 17 percent GST on industry type sewing machines instead of household type, arguing that it would hurt the common man.

The Senate panel, which met under Senator Taleh Mehmood, continued its deliberations for the third consecutive day here on Friday at the Parliament House. The Senate panel unanimously recommended for the inclusion of insurance guarantee, bank guarantee and cheque for substances registered as drugs and medicament under the Drug Act 1976.

It further recommended that the release of guarantee may also be time bound. The committee also recommended bank guarantee on the oil and steel industry. The committee also sought details from the Federal Board of Revenue (FBR) on cases pending with regard to release of guarantees.

The FBR assured the committee that the report will be submitted within a fortnight. The Chairman Federal Board of Revenue, Dr Aashfaque Ahmed, reiterated the IMF demand on speedy provision of subsidy and refunding of guarantees. "The refund system of bank guarantees has been accelerated by 98.5pc this year," stated the chairman FBR while assuring that the apprehensions will prove infructuous. He said that the pharma industry stood at Rs700 billion and without a refund system, it cannot run smoothly; the refund system is a worldwide practice.

The chairman FBR has invited the Senate committee to take a presentation on the upgraded refund system mechanized placed by the FBR and clear their apprehensions. The chairman of the committee acknowledged the invitation, stating it the need of the day and directed to schedule a meeting on the subject.

Senator Farooq Hamid Naek, while expressing reservations on the 'No tax Exemption-only Targeted Subsidy Policy', said that only time will tell the truth of the consequences of such policies. "Tax imposed on the sewing machines of the household type is a clear example of being unjust to the class of society, who cannot afford branded clothing and boutiques wardrobes," said Senator Farooq Hamid Naek. The import of sewing machine is being misused by industrialists, stated the chairman FBR. The committee unanimously recommended change in the word, from "household type" to "industrial type".

The proposed amendment on the Customs duties on personal wearing apparel and bonafide baggage imported by overseas Pakistanis and tourists was also unanimously rejected by the committee. The chairman FBR acknowledged the recommendation on the same and assured to revisit the proposition. The committee also omitted the tax on solar panels on the analogy that it is discouragement on the use of innovative natural resources for development of the country.

Senator Faisal Subzwari also opposed the imposition of GST on laptops/ computers and stated it is against the idea of the Prime Minister for Digital Pakistan.

The public petition by Muhammad Fayyaz Qureshi, Vice Chairman Pakistan Gems Jewelry Traders and Exporters Association, was referred to the Federal Board of Revenue. The chairman FBR invited all the stakeholders, including exporters and importers, for a public hearing and obtain a single solution, in consensus, on the matter of 17pc sales tax on import and supply of gold and silver in unworked condition and articles of jewelry. The committee also proposed recommendation that a meeting should be held with the Senate Committee on Commerce, the Finance Committee, the FBR and all the stakeholders to deliberate on the culture of smuggled gold in the country.

The chairman FBR assured that the FBR is working on levied tax in the agriculture sector. The chairman FBR stated that he has affirmed with the finance minister on the subject. "All differences in sales tax should be eliminated in the next five months," the chairman FBR stated.

The committee unanimously agreed on the proposition of fully documenting the match box industry. The committee proposed recommendations to increase the fixed tax on match stick material from Rs90 to Rs110 per kg. The chairman FBR informed the committee that machinery is being imported more than raw material, in export processing zones. The committee approved the imposition of sales tax on imported machinery of export processing zones. The chairman FBR stated that the main problem in erstwhile FATA is the post data check. Erstwhile FATA has Rs50 billion in taxes, said Senator Saleem Mandviwalla. The FATA industries have given fake checks, he added. The committee believed that the import made by erstwhile FATA should be stopped till the full tax payment.

The public petition by Jahanzaib Nadeem of Metro Shoes was also taken up by the committee. The petitioner submitted that a frivolous FIR and illegal harassment at personal level has been faced by him and the company by the FBR authorities, which are demanding Rs500 million deposit whereas he said that Rs700 million is the total asset of the company. The matter was referred to the FBR Member Operations with the direction to probe into the matter and obtain legality on the same and submit report. The matter was deferred till Monday to be taken up by the committee.