FBR to find other sources to raise Rs 30bn if GST not increased

[Lahore_Real_Estate]

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Sohail Ahmed said that the Federal Board of Revenue (FBR) will have to find alternative revenue sources of over Rs 30 billion for meeting revenue collection target of Rs 1667 billion, in case the government reduces the general sales tax rate from 17 to 16 percent

At the Senate Standing Committee on Finance here on Friday, FBR Chairman stated that the government has fixed Rs 1667 billion as revenue collection target of the FBR for fiscal (2010-2011). To meet the target, the FBR has taken measures for generating Rs 83 billion, beside enforcement/administrative measures. One percent increase in sales tax would generate additional amount of over Rs 30 billion. In case the government withdraws the decision, the FBR will have to take other taxation measures to collect this amount.

He said that presently sales tax has been collected in VAT mode.

“The VAT is not a new tax and the VAT is not on the table,” he remarked.

Sohail Ahmed said that most of the sales tax exemptions will be abolished in October 2010, when the reformed GST would be introduced. Over a period of time, a number of sectors have been exempted from sales tax and the reformed GST would remove distortions in the exiting sales tax regime.

FBR Chairman said that the Finance Bill (2010) has not incorporated any amendment relating to the VAT and no amendment has been introduced in Finance Bill to raise the registration threshold from Rs 5 to Rs 7.5 million.

Giving the status about the Federal VAT Bill, FBR Chairman said that the Bill is presently under consideration of the National Assembly Standing Committee on Finance.

The Senate Standing Committee also recommended providing more details including attached conditionalities of donors for extending loans to Pakistan. On this issue, Ishaq Dar said that under Federal Legislative List (part-II), the supervision and management of public debt was put under the ambit of Council of Common Interest (CCI), comprising of Prime Minister and Chief Ministers of four provinces, so CCI would take care of all these issues in future.

The committee also recommended protecting development funding of Higher Education Commission (HEC) from any cut as well as ensuring smooth provision of scholarship for students studying abroad. The committee also recommended Prime Minister’s People Works Program-II to provide Rs 5 billion to flood affected areas of Balochistan including Gawadar, Pasni and others, out of total allocated amount of Rs 25 billion for 2010-11.

The committee also finalized a recommendation to impose a ceiling of Rs 5 million loan as tax free for employees of central bank and other banks, instead of having no limit proposed in the Finance Bill 2010.