By Staff Reporter
ISLAMABAD: The Senate Standing Committee on Finance and Revenues on Wednesday rejected the FBR’s proposal to increase advance tax on the sale and purchase of property from 1 to 2 percent for filers in the Budget 2022-23.
However, the Senate panel extended its support and approved an increase in the advance tax from 2 to 5 percent on the sale and purchase of property for nonfilers.
The Senate Standing Committee on Finance and Revenue continued its day-long deliberations for finalising recommendations on the Finance Bill 2022 here at the Parliament House under the Chairmanship of Senator Saleem Mandviwalla.
The Committee proposed amendments in the Finance Bill 2022, recommending the government to charge 1 percent market value as deemed income tax on plots valuing more than Rs25 million after five years of transferring of land.
Initially, the Senate panel unanimously rejected the FBR’s proposal to charge 1 percent market value on plots valuing more than Rs25 million but in their second thought, they recommended that the deemed income should be taxed if the plot was not constructed in five years.
The Senate panel also proposed amendments in the Capital Gains Tax (CGT) on the holding period and recommended that the holding period of the plot should be reduced from 6 to 5 years and revive the existing slabs for payment of CGT.
Sardar Tahir Mehmood, Real Estate Association representative, along with representatives of Islamabad Chambers of Commerce and Industries (ICCI) appeared before the committee and argued that investment in real estate would exit from Pakistan if the government did not bring changes in tax proposals.
Senator Mohsin Aziz, said the PTI government promoted the construction and real estate sector but now the FBR was moving in another way.
The representatives of the Pakistan National Heart Association PANAH proposed to the government to slap 20 percent Federal Excise Duty (FED) on all types of sugary drinks. The FED on aerated water was 13 percent and it should be increased to 20 percent. The FED on juices at a rate of 5 percent was withdrawn a couple of years back so it should be slapped again at higher rates. The Chairman FBR Asim Ahmad recommended the committee to also hear the other side’s point of view before making its recommendations.
The committee approved the proposal to increase the rate of the Federal Excise Duty (FED) on the club business, and first-class travel by air from Rs10,000 to Rs50,000. It was apprehended that people might start purchasing tickets from foreign/transit destinations.
Minister of State for Petroleum, Senator Musadik Malik told the committee that the government’s policy in the new federal budget was to impose additional taxes on the rich class and those having the capacity to pay taxes. While justifying increased FED on air tickets for the rich class, he said that if any Pakistani wanted to avoid this FED and intended to buy a ticket from a foreign/transit destination, he would have to buy the ticket by paying in dollars and pounds and also pay taxes on credit card payments on international transactions.
Chairman of the Panel Senator Saleem Mandviwalla was of the view that the taxation of international air travel should be done in such a way that the revenue of the FBR stays in Pakistan and it does not transfer to other countries.
About the fixed tax scheme for retailers, Senator Mohsin Aziz stated that it was a political move of a political party to allow the fixed tax to the retailers. The FBR should share the number of retailers to be brought under the fixed tax scheme.
The committee proposed a 12.5 percent sales tax on the import of electric vehicles (up to 1000cc or 50KV) in CBU condition and a 17 percent sales tax on the import of electric vehicles (above 50KV). Under the Finance Bill 2022, the FBR has proposed a uniform rate of 2.5 percent sales tax on the import of all types of electric vehicles in CBU conditions.
Senator Talha Mahmood objected that the business community should be provided tax relief to encourage more investment and the creation of job opportunities.
The FBR informed the committee that the issue of sales tax on restaurants was resolved between the Center and provinces and now provinces would collect sales tax on restaurants.
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