Home »Taxation » Pakistan » 1250 KV gas generators: Senate body asks FBR to withdraw 10 percent RD notification

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  • Nov 10th, 2017
  • Comments Off on 1250 KV gas generators: Senate body asks FBR to withdraw 10 percent RD notification
Senate Standing Committee on Finance has recommended to the Federal Board of Revenue to withdraw notification of 10 percent regulatory duty (RD) imposed on 1250 KV gas generators after textile industry complained that they are being used by them to reduce the cost of production of the textile products. A meeting of the Senate Standing Committee on Finance chaired by Senator Saleem Mandviwalla heard the reservation of various industries regarding increase in RD on around 730 items.

The committee was informed by the representatives of All Pakistan Textile Association (APTMA) that increase in RD on gas generator will increase their cost of production. They added that subsequent to 10 percent RD by the Federal Board of Revenue (FBR), the sales tax and duty on 1250 KV gas generator have increased to 41 percent.

The FBR and Ministry of Commerce also contradicted each other on RD issue with Ministry of Commerce maintained that decision to impose additional duty on import of goods was taken by the FBR while FBR responded that additional RD was imposed on the recommendations of the Ministry of Commerce. The FBR official further stated the Ministry of Commerce's desire to reduce the trade deficit necessitated imposition of RD on import of some commodities.

The committee was also informed that subsequent to RD, the prices of vehicles tyres has surged from Rs 500 to Rs 5,000. Representatives of Tyres Association stated that vehicles tyres do not fall under the category of luxury items and have become a necessity. The association said that the country imports Rs 36 billion tyres annually as only 20 percent demand of tyres is being met domestically. There was also surge in demand of tyres after the China-Pakistan Economic Corridor and increase in other routes. The meeting was also informed that around 40 percent tyres are smuggled in the country. The association termed 35 percent tax on import of tyres unfair to the people and increase in RD and taxes would encourage the smuggling of tyres in the county.

The government should not have taken the decision to impose regulatory duty without the consent of the Parliament, was the view of the committee members and Senator Kamil Ali Agha stated the government appears to have given a freehand to departments for increasing taxes as per their desire and termed the decision to impose RD unconstitutional.

The committee also held discussion on minimum tax on asset management companies and asked representatives of assets companies of having meeting with the FBR officials. The FBR officials were unable to justify duty on local auto parts manufactures and members of the committee stated duty should be imposed not on those items which are locally produced and the FBR should impose duty on those part which are still being imported and deletion program was no implemented even after 30 years.

The chairman of the committee also decided to issue notices to the three foreign banks after they refused to come to the committee on Euro Bonds. Mandviwalla said that the banks have shown their inability to come give their view on the queries of the committee members with respect to Euro Bond issuance. He said that two of them have conveyed to the committee that they are unable to come while the third one has communized that it was travelling and therefore it can not attend the meeting.

The members of the committee Mohsin Aziz and chairman of the committee Saleem Mandviwalla stated that the government has not been providing information to the committee from the last one-and-half-year and now the bank involved in the issuance of Euro Bond have refused to appear in the committee. Mandviwalla said, "My information is that banks were told not to appear before the committee."



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