KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Agha Shahab Ahmed Khan has stressed that the rate of GST should be reduced by 3 percent to 14 percent from current 17% which will have a very positive impact on business sentiment and it would trigger demand in domestic market, besides providing much needed relief to trade, industry and consumers.
Highlighting Budget Anomalies identified by KCCI which have been submitted to the Anomalies Committee (Business & Technical), President KCCI advised to withdraw 3 percent Further Tax on Sales to Unregistered persons to facilitate transactions. Agha Shahab said that It is unjust to force suppliers to provide CNIC of unregistered person and pay 3% Further Tax at the same time. After getting unchecked access to the data base of citizens, Federal Board of Revenue (FBR) should be made responsible to broaden the tax base and register all entities in Sales Tax regime so that suppliers are not forced to sell to Unregistered persons.
He further pointed out that after acquiring powers by FBR to access data of citizens from institutions and organizations such as FIA, Banks, NADRA and airlines etc., a major security risk has been created for citizens/taxpayers. Hence, Adequate safeguards may be inserted in the law and exemplary penalties be fixed in the provisions in case if the data is compromised by an official while access to data should be limited to officers in higher grades only, he proposed.
President KCCI said that the phenomenal increase in rate of FED from 13% to 25% on Caffeinated Energy Drinks is unjust and discriminatory. Caffeinated Energy Drink is produced by only one of the two major producers of beverages in Pakistan who contributes a major portion of over Rs.100 Billion in Tax revenue. The unjust increase is tantamount to targeting one producer and is discriminatory. Any tax should be imposed on the industry, not individual producers therefore, the Rate of FED on Caffeinated Energy Drink be restored to 13 percent.
Referring to Clause 12 of Finance Bill U/S 45B in which a new sub-section (5) has been added, which disallows production of any new documentary material or evidence before Commissioner (Appeals) which earlier has not been produced by the Appellant before the officer of Inland Revenue. He stressed that the clause may be removed as it is contrary to law of natural justice and ultra-vires of the constitution. A taxpayer should not be denied the right to produce evidence or documentary material at any stage while contesting his case.
KCCI had proposed to restore Tax Credit @10% on purchase of new machinery for BMR, to encourage investment in industry and spur growth, which was allowed prior to 2019. However, the proposals have not been included in Finance Bill’2020-21 Agha Shahab urged the policymakers to restore rate of tax credit to at least 10% and this credit should be applicable up to FY2025 to enhance the investment in production capacity of industries.
Expressing concerns over re-imposition of 3 percent Value Addition Sales Tax on Commercial Import of Raw Materials, President KCCI said that the VAT cannot be imposed where no value is added. Therefore, the anomaly may be rectified and the clause re-imposing 3% Value Addition Sales Tax on commercial importers of Raw materials in the Finance Bill should be deleted.
He further mentioned that inclusion of Flavored Milk in 8th Schedule since July 2015 has resulted in sharp increase in cost and retail price of Flavored Milk which has been a healthy diet supplement and popular among the masses. Flavored Milk category is in initial development stage within Dairy Industry, but its growth potential has been capped by imposition of Sales Tax and Further Tax at high rate and market size has reduced. Ironically, Milk and Fat Filled Milk (Liquid Tea Whitener) and components remain in Zero Rate Regime.
Flavored Milk with natural ingredients is a healthy substitute for other drinks, particularly for children and has a tremendous market potential for growth. It also complements to import substitution and saving of foreign exchange. Therefore, the locally manufactured Flavored Milk and its components/ sub-components may be excluded from 8th Schedule and included in Zero Rated regime by insertion in 5th Schedule, and status prior to Finance Act 2015 may be restored.