Federal Board of Revenue (FBR) Chairman Tariq Pasha said Tuesday that increase in federal excise duty on tobacco encouraged legal trade of the commodity and it enhanced revenue generation from this end. Briefing the meeting of the Senate Standing Committee on Finance chaired by Senator Saleem Mandviwalla, the chairman FBR further stated that tax authorities have confiscated a large number of tobacco containers of unpaid FED. As a result, he said, the revenue from tobacco which was decreased to Rs 80 billion in 2014 has improved considerably.

The FBR officials while briefing the committee on change in sales tax rates on petroleum products without the approval of the Cabinet in July 2017 stated that board has got the post facto approval of making adjustment in sales tax rates after the new cabinet sworn in following the disqualification of Prime Minister Nawaz Sharif in Panama Papers case.

The meeting was informed that since January 2015, following fluctuation of international petroleum prices, the government has been adjusting rates of sales tax on petroleum products to protect the revenue.

The FBR officials added that this was being done in exercise of powers by the federal government under Sales Tax Act, 1990 with the approval of the finance minister in consultation with the prime minister. Through an amendment in the Finance Act 2017, the FBR was allowed to exercise this power subject to the approval of finance minister.

The meeting was told that for the month of August 2017, Petroleum Ministry proposed downward revision of ex-depot prices and at that time, the federal cabinet stood dissolved following disqualification of former prime minister in Panama Papers case.

The finance secretary while considering special circumstances decided not to make any change in prices of petroleum products effective from August 1, 2017 till induction of finance minister in the new cabinet. But to implement the decision, it was, however, required to adjust rates of sales tax and petroleum levy and new rates were worked out by the tax authorities in consultation with the Ministry of Petroleum. The sales tax on motor spirit was increased from 20.5 percent to 23.5 percent and on high speed diesel from 33.5 percent to 40 percent to maintain the prices unchanged against the proposal of downward revision in prices. However, he stated that increase in sales tax remained effective for a short time and previous rates were restored on August 6 with the approval of finance minister.

Pasha maintained that Benami rules have been finalized and would be presented to the meeting of the federal cabinet. The meeting was also informed that committee recommendations regarding settlement of GIDC with the CNG sector are being implemented. A proposal of Rs 12 billion to this effect would be presented to the federal cabinet, the Finance Ministry's officials stated. The committee also discussed the issue of increase in duty on LED lights.

Copyright Business Recorder, 2017