[ Government seeks to levy standard ST on cotton in budget: Rs 50 billion revenue eyed ]
[ Rs180bn tax exemptions to be withdrawn ]
Claims filing: PRGMEA urges ministry to extend date [ top ]
Business Recorder, March 24, 2015
The Pakistan Readymade Garments Manufacturers and Exporters Association (South Zone) has urged the Ministry of Textile Industry to extend the date to file the claims under notification no. 1(41) TID/14-RDA till May 31, 2015 due to lengthy procedure and frequent changes by RDA cell in online submission of claims for which members are facing problems to file their online claims.
PRGMEA said that exporters are filing two years data of exports for shipments made during 2013-14 if increased beyond 10 percent over last years' exports ie 2013-14 which comprising hundreds and thousands shipments during the years, while procedure to submit claims is quite lengthy.
He requested the Mintex/RDA Cell to extend the date in the larger interest of the Member exporters who are eligible to get incentive under DLTL Scheme 2014-15
Government seeks to levy standard ST on cotton in budget: Rs 50 billion revenue eyed [ top ]
Business Recorder, March 24, 2015
The government seeks to impose a standard sales tax on cotton in the budget 2015-16 with a view to generating about Rs 50 billion revenue, official sources told Business Recorder. Finance Minister Ishaq Dar chaired a meeting of a high-level committee of secretaries, held in the Federal Board of Revenue (FBR) reviewing certain SROs to finalise the list of such orders as budget date is approaching. According to sources, a menu of budget proposals was shared with all the participants for generating revenue for the financial year 2015-16.
Currently, sales tax exemption is available on local cotton and a 5 percent sales tax is applicable on the import of cotton. However, in the upcoming budget, the government has proposed imposition of sales tax on it (local/supply stage).
The government has set cotton target for the next season (2015-16) at 15.49 million bales against the revised target of 13.48 million bales for the outgoing season (2014-15). The government had set initial target of 15.1 million bales for the current season (2014-15), however later the target was revised three times to finally set at 13.48 million bales due to multiple issues including water shortage, rains/floods, and shortage of certified seed. According to sources the revised target is close to the revised target and will be achieved.
In last budget, 5 percent sales tax was imposed on a number of items imported by seven sectors under SRO.575(I)/2006 including machinery and equipment for development of grain handling and storage facilities. In accordance with the policy of reviewing SROs, seven sectors ie Sr. No. 2, 3, 4, 9, 15, 20 and 30 of SRO were charged at reduced rate of 5% sales tax. The concessions for the socially sensitive sectors were retained. However, the concessions against S. No. 8, 16, 17, 24, 25, 32, 33, 37 and 38 were withdrawn.
The FBR had transposed SRO.727(I)/2011 to Schedule with 5 percent rate of sales tax. This notification grants exemption on import and supply of plant and machinery not manufactured locally subject to certain conditions. Sales tax was charged at reduced rate of 5 percent on such plant and machinery, subject to the same conditions, by transferring the notification to the relevant Schedule of the Sales Tax Act, 1990.
The FBR had transposed SRO 549(I)/2008, dated11.06.2008 to Fifth Schedule. This notification grants zero-rating on certain goods, including petroleum crude oil, certain raw materials for export oriented sectors, etc. Since this zero-rating is considered essential, while the notification is required to be deleted, items in the notification were transferred to the Fifth Schedule of the Sales Tax Act, 1990.
The FBR had transposed SRO 551(I)/2008, dated 11.06.2008 to Schedules with certain changes. This notification grants exemption to a number of goods such as raw material for pharmaceutical industry, iodized salt, medical equipment, components of energy saver lamps, renewable energy items, raw cotton and oil seeds for sowing, etc. The FBR has transposed SRO 501(I)/2013, dated 12.06.2013 to Schedules with certain changes. The FBR has rescinded SRO 69(I)/2006, dated 28.01.2006. This notification grants reduced rate of sales tax 14 percent to rapeseed, sunflower seed and canola seed. The notification was rescinded, thereby charging standard rate of sales tax (17 percent) on these seeds. Enforced through rescission of the notification, effective July 1, 2014.
Rs180bn tax exemptions to be withdrawn [ top ]
Dawn, March 21, 2015
ISLAMABAD: The government has decided to withdraw tax exemptions worth Rs180 billion, or 0.5 per cent of GDP, in the budget 2015-16 in a bid to bring down the deficit.
The exemptions granted through SROs currently stand at Rs483 billion. Of this, Rs104bn exemptions were withdrawn in the first phase in 2014-15 budget. The first phase of exemptions were finalised in 12 meetings which were formally submitted to the Finance Ministry in May 2014.
The SRO is an executive order, which grants tax exemptions to an individual, industry or sector. It is issued on the directive of either the finance minister, the cabinet’s Economic Coordination Committee or on a proposal by the Federal Board of Revenue.
To review modalities for withdrawing exemptions in the second phase, a meeting was held in the Federal Board of Revenue (FBR) on Friday, headed by Finance Minister Ishaq Dar. Commerce Minister Khurram Dastagir Khan and other senior officials were also present.
A source privy to the meeting told Dawn that several meetings will be held to finalise the quantum of exemptions given through SROs which will be withdrawn in the second phase.
“We are working in details to identify sectors enjoying exemptions”, the source added.
The exemptions will also include upward increase in tariff on certain products as well as change in schedules, said a source, adding the SRO exemptions to be withdrawn in the budget 2015-16 will be slightly over Rs100bn by taking into account certain sensitive sectors which needed protection.
There are areas like free trade agreements or preferential trade agreements where government has given tariff concessions to trading partners. Now, this issue can only be resolved through review of the existing treaties.
The FBR has already conducted a study on tax exemptions envisaging details of sector specific exemptions granted under Statutory Regulatory Orders (SROs). The report reveals that yearly tax exemptions enjoyed by industrialists, feudal lords and companies now amount to a staggering Rs480 billion — nearly two per cent of the country’s Gross Domestic Product (GDP).
In a statement, Finance Minister Ishaq Dar said that efforts are being made to end SRO culture. “No more exemptions for elite or privileged,” Mr Dar claimed.
Pakistan’s tax system had been riddled with distortive and discriminatory exemptions and concessions had been granted to vested groups over a long period.
Mr Dar said the first part of a comprehensive phase out plan (launched in 2013) for ending SRO/exemption culture; spread over three years had been undertaken.
In the second phase of the plan, the minister said all residual concessions/ exemptions either in the SROs or Schedules shall be withdrawn over the next year except socially sensitive concessions.