During a recent meeting with the Senate Standing Committee on Finance, the Federal Board of Revenue (FBR) announced its plans to revise the valuation rates of properties, increasing them from the existing 75 per cent to 90 per cent of the market rate. The FBR’s Member Inland Revenue (IR) Operations, Mir Badshah Wazir, explained that the new valuation rates would be implemented through a Statutory Regulatory Order (SRO) to be issued in July 2024, following the approval of the budget 2024-25.
Additionally, the FBR intends to introduce a simplified scheme for retailers to replace the unsuccessful Tajir Dost Scheme, which saw only 78 retailers opting for registration during the voluntary period.
While the Senate panel expressed concerns about the impact of these changes on various sectors, including the media industry, there were mixed opinions regarding the imposition of taxes. For instance, there were discussions about abolishing the 10 percent GST on newsprint, with some senators arguing for its withdrawal due to the challenges faced by the media industry. However, others supported the imposition of the GST on newspapers. Ultimately, the Senate panel recommended the abolishment of the 10 percent GST on newsprint.
The meeting also highlighted the FBR’s efforts to broaden the tax base by adding 1.5 million new tax filers in the outgoing fiscal year. However, concerns were raised about the number of nil-filers, with estimates suggesting that over 30 percent of tax filers were zero-filers. The FBR cited severe Human Resource (HR) constraints, with 6,000 vacant posts out of the sanctioned 18,000, as a significant challenge in its operations.
Furthermore, discussions were held regarding tax fraud, particularly in the steel sector, where alleged fraudulent activities have reportedly caused substantial losses to the national exchequer. The FBR revealed that Rs756 billion of alleged tax frauds had been uncovered, and measures were taken to address these fraudulent activities, including arrests.
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Representatives from Beaconhouse National University proposed the elimination of a 25 percent tax rebate on salary income for teachers, emphasizing its potential impact on the tax liabilities of university faculty. However, this proposal did not find agreement among the senators.
On the retail front, the Pakistan Retail Business Council (PRBC) expressed concerns about taxation reforms, highlighting the challenges faced by compliant retailers compared to non-compliant counterparts. The committee recommended regular dialogues with the FBR to address retail sector concerns and proposed enhancing human resources within the sector for greater efficiency.
Dr. Khurram Tariq, President of the Faisalabad Chamber of Commerce & Industry, presented recommendations aimed at preventing duplicate deductions at source and addressing liquidity challenges in the export industry. However, these proposals were not endorsed by the FBR policy members.
In conclusion, the meeting underscored the complex landscape of tax and fiscal policy in Pakistan, with various stakeholders expressing diverse views and proposing measures aimed at ensuring fairness, efficiency, and compliance within the taxation system.
