ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved tax exemptions and other incentives for the next five years for the people of erstwhile FATA and PATA after the landmark 31st Constitutional Amendment.

Prime Minister Shahid Khaqan Abbasi chaired a meeting of the ECC at PM Office.

The ECC has approved tax exemption for erstwhile FATA and Provincially Administered Tribal Areas (PATA), which have become part of the Khyber Pakhtunkhwa after President Mamnoon Hussain signed the 31st Constitutional Amendment.

Speaker of the Khyber-Pakhtunkhwa (KP) Assembly Asad Qaiser early this week voiced concerns over the issue of tax exemption enjoyed by the people of Malakand Division.

Qaiser wrote a letter to the National Assembly Speaker Ayaz Sadiq informing him about the objections raised by lawmakers belonging to the Provincially Administered Tribal Areas (Pata-the Malakand Division) over the omission of the tax exemption enjoyed by the people of Pata before the 31st Constitutional Amendment Act 2018.

The ECC approved following tax exemptions and other incentives for the next five years for the people of erstwhile FATA and PATA including exempting of income tax on profits and gains of existing businesses conducted by individuals for a period of five years. These businesses however need to be registered with FBR by 30th September 2018.

It has also exempted the Fata and Pata from sales tax to the retailers to facilitate the general consumers. Similarly, domestic consumers of electricity would be exempted from sales tax on domestic consumption of electricity. Federal Excise Act 2005 shall replace the erstwhile Central Excise Act 1944.

Non customs paid vehicles would be allowed to be used in erstwhile FATA/PATA for a period of five years ending on 30th June 2023.

However, these vehicles will not be allowed to cross over to other areas of the country. On the expiry of the five years' relaxation period, the vehicles would be regularized on payment of leviable duty and taxes.

The ECC has also approved exemption from all withholding taxes, except on salary. Any person seeking to set up new industrial undertaking is granted exemption from Income Tax subject to prior approval of the ECC.

The meeting discussed the issue of revocation of Neelum Jhelum surcharge and decided that the surcharge would end on achieving Commercial Operation Date (CoD) of the project.

The ECC also approved relending terms for Pakistan Mortgage Refinance Company Limited (PMRCL) for the purpose of ensuring efficacy of the facility towards promoting low cost/affordable housing in Pakistan.

At the conclusion of the meeting, the prime minister appreciated valuable contributions of the ECC members towards taking informed decisions in the larger public interests.

Secretary Finance, on behalf of the ECC members, thanked the prime minister for his continued guidance and support.