ISLAMABAD - In a bid to generate more revenues, the government is likely to eliminate tax exemptions in various sectors in the upcoming budget for next fiscal year 2021-22, officials of the Federal Board of Revenue (FBR) said on Monday.
“The government will eliminate the tax exemptions in next budget to increase the tax collection,” said Muhammad Javed Ghani, Chairman FBR, in Senate Standing Committee on Finance and Revenue, which met under the chair of Senator Farook H Naik. Chairman FBR said that preparations of next annual budget are underway. The government would finalize the budget proposals by end of March, he added. Talking about tax exemptions, Javed Ghani said that government would continue tax exemptions on food items, medicines and others essential items. The government would provide relief to the common people and would take measures to generate employment opportunities in the budget.
Chairman FBR said that local industry has been benefitted due to tax exemptions, which has helped in increase in tax collection of the country. He informed that government would also take measures to control the smuggling in the next budget.
Earlier, the officials informed the parliamentary committee that FBR for the first time has placed a track and trace system (TTS) for major tax evading sectors including tobacco, sugar, cement, fertilizer and beverages. It was informed that track and trace system could not be awarded in last more than one decade despite making several efforts. FBR has stated that installation of the Track and Trace System in the identified sectors would be a game changer for improving revenue and curbing counterfeit products in the market. FBR expects to start installing UIMs (tax stamps) on various sector products from July 2021.
FBR chairman says government would finalise budget proposals by end of March
The Senate Standing Committee on Finance and Revenue has approved the Companies Act, 2017 [The Companies (Amendment) Bill, 2020] with some amendments, which was introduced by Senator Javed Abbasi. The ministry of finance has opposed the Bill. Senator Abbasi said that law regarding Social Corporate Responsibility is implemented all over the world. However, in Pakistan, there are few guidelines of Securities and Exchange Commission of Pakistan (SECP) but no law in applicable in this regard. He said that different companies are investing billions of rupees in Pakistan and it is their responsibility to start welfare projects for the people of area. He said that Companies should be made bound to spend two percent of their net profit on the welfare of the people of area in which the company is making investment.
However, government’s departments have opposed it. Official of the FBR said that government would have to give tax exemptions in this regard, which would result in reduction in tax revenues. Officials of the SECP said that it would reduce the number of companies working in the country. They said that there are SECP’s guidelines regarding Social Corporate Responsibility. Ministry of Finance has also opposed the Bill and said that it would create problems.
However, the Senate Standing Committee on Finance and Revenue has rejected the concerns of various government’s departments and recommended the Senate to approve the Bill with some amendments.