The Chairman of the Federal Board of Revenue (FBR), Amjed Zubair Tiwana, presented the proposed 18% general sales tax (GST) for packaged food items, including pulses and rice, for the upcoming fiscal year in a session with the Senate Standing Committee on Finance and Revenue. However, he clarified that unprocessed and unpackaged food items would not be subjected to GST.
Tiwana also addressed the price increment for packaged milk and infant milk, suggesting the potential consideration of phased GST if companies pass on benefits to consumers. The committee, playing an active role, discussed the proposal to ban foreign tours for non-filers and rejected the suggested hike in tax rates for the salaried class after learning about the significant disparity in tax contributions between the salaried class and exporters, making the audience feel their input is valued and considered.
The committee members expressed concerns over the taxation system’s fairness, particularly regarding the tax treatment for exporters’ income and the proposed tax rate revisions for the salaried class. While some members supported the FBR’s move to bring exporters under the normal tax regime, others opposed it, citing potential adverse impacts on the country’s foreign exchange reserves.
Tiwana justified the proposed tax rate adjustments for exporters and retailers from an equity and fair taxation perspective, highlighting the estimated additional revenues that could be generated by these changes. He also revealed that the FBR had engaged in careful discussions with the International Monetary Fund (IMF) to negotiate revised tax rates for the salaried class, ultimately convincing the IMF to reduce the proposed rates and reassuring the audience about the thoroughness of the process.
The committee also deliberated on several other tax-related proposals, including the capital gains tax on real estate and securities and measures to broaden the tax base. The discussions underscored the complexity and sensitivity of tax policy decisions and their potential implications for various segments of the population.
