GST hike imminent?

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ISLAMABAD: The government is mulling promulgation of draft Tax Laws (Amendment) Ordinance, 2013, through which the rate of GST has been proposed to be increased from 16 to 17 percent.


This proposed ordinance had not yet been signed by the president. Presidential Spokesman Farhatullah Babar on Wednesday late night told The News that nothing of this sort was in his knowledge.


However, he wondered how the caretaker government could promulgate such an ordinance which is related to tax laws, at a time when the incoming government was going to assume powers in the next few days.


The confusion continued on Wednesday as to whether the government had promulgated this ordinance or not. First, the FBR prepared a press statement as well as explanations but later on FBR Chairman Ansar Javed told The News that the tax machinery had made certain proposals but he had no knowledge whether an ordinance would be issued or not.


When contacted, Finance Ministry’s spokesman Rana Assad Amin said he was unaware of any such developmentas the FBR might forward any proposal directly to adviser to the PM on finance.


Through the draft ordinance, the sources said that the FBR proposed an increase in the GST rate by 1 percent jacking up from 16 to 17 percent with immediate effect. The government proposed to raise customs duty from zero to one percent on the import of 284 items through the Tax Laws (Amendment) Ordinance, 2013. The board has proposed to impose two percent ‘further tax’ on supplies to un-registered persons, 17 percent sales tax on sugar. It proposed imposition of 10 percent withholding tax on domestic electricity consumers having monthly electricity consumption of more than 1,000 units.


The FBR has proposed to charge sales tax on the basis of the printed retail price on fertilisers; bottled water; batteries; chocolates, toffees and candies; bleaches; syrups and squashes; biscuits and confectionary; coffee; paint, varnishes, gums and resins, pigments, distempers, colours, dyes, enamels, glazes, thinners, blacks, cellulose lacquers and polishes; jams and marmalades; glass; paper and paper board products; sanitary pads and diapers; cigars; aerosol spray (whether cosmetics use or as pesticides); shaving foam and gel; washing powder, liquid and soap; tiles; vinegar; wax, tea whitener and tea powder; spices and condiments bearing brand names and trademarks.


Through the draft Tax Laws (Amendment) Ordinance, 2013, the FBR has proposed to impose five percent withholding tax on purchase of new cars and jeeps. The rate of withholding tax on cash withdrawal from banks would be increased from 0.2 to 0.3 percent. Where the monthly electricity consumption does not exceed 1,000 units by domestic users, the rate of tax would be zero.


Five percent withholding tax would be applicable on functions like wedding related ceremonies, seminar/workshop, session/exhibition, concert/show, or a party. The owner, lease-holder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, or a community place would collect five percent advance tax on the total amount of the bill from a person arranging such functions.


The FBR proposed two new slabs of income tax on rental income. New slabs revealed that the rate of withholding tax would be 12.5 percent (Rs2,000,000 to Rs3,000,000) and 15 percent withholding tax would be applicable on rental income above Rs3,000,000.


Under the proposed ordinance, where supplies are made to an unregistered taxpayer, two percent of the value in addition to the price will be charged, provided that the federal government notifies otherwise, the sources said.


The FBR has revised federal excise duty structure on cigarettes. The rate of the FED would be Rs2,325 per thousand cigarettes if their price exceeds Rs2,286. The rate of the FED would be Rs880 per thousand cigarettes if their on-pack printed retail price does not exceed Rs2,286.


The FED would be charged on lubricating oil if supplied to the Pakistan Navy for consumption in its vessels. The FED would be collected on transformer oil if used in the manufacture of transformers supplied against international tenders to a project financed out of funds provided by the international loan or aid giving agencies.

Courtesy:  The News

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