The government has decided to abolish the tax on the import of point-of-sale (POS) machines, and large retail stores will now be able to import duty-free machines.
This was stated by the Federal Board of Revenue (FBR) during a briefing of the Senate Standing Committee on Finance.
A meeting of the Senate Standing Committee on Finance, Revenue and Economic Affairs was held under the chairmanship of Senator Muhammad Talha Mehmood at the Parliament House on Thursday to consider and finalize the recommendations on the Finance Bill 2021-22.
Various points of the Finance Bill were discussed in detail during the meeting. Officials from the Federal Board of Revenue (FBR) informed the committee that the government has decided to abolish the tax on the import of POS machines.
Large retail stores will be able to import duty-free machines. They briefed the attendees that the import duty on the card reader machines used for credit/debit cards has also been abolished.
They also informed the committee that the duty on the raw materials of pharmaceutical items has been set to zero, and that zero duty has been set on all the pharmaceutical items, to which Senator Sabzwari responded that medicines should also be made cheaper in the country now.
The committee summoned the Drug Regulatory Authority of Pakistan (DRAP) on the matter. While briefing the committee, the Chairperson of the National Tariff Commission (NTC) said that significant relief has been given to various export sectors, including textile, in the last two years.
So far, more than 2,000 tariff lines have been reduced to zero. The tax duties on all the raw materials have been significantly reduced, and the exports of textiles are targeted to increase by Rs. 4-5 billion next year, she stated.
The duty on the machinery and types of equipment has been abolished in order to promote tourism in the country. Senator Sadia Abbasi pointed out that theme-based parks are needed to protect human lives.
Tourism is an industry that makes countries stand out, added the Chairman Committee. The committee approved the duty waiver clause on tourism.
The FBR apprised the committee that the regulatory and additional customs duty have been exempted on vehicles below 850 cc vehicles. The FBR officials stated that the duty on the import of auto kits has been reduced from 30 percent to 15 percent for the promotion of the local auto sector.
Commenting on this, Senator Saleem Mandviwalla said, “The most expensive cars are being made in Pakistan; you are giving duty exemption but there should be a pricing system”.
The committee deferred the duty waiver clause on vehicles. The FBR officials apprised the committee that the duty on Euro 5 has also been reduced. The committee summoned the Secretary Petroleum for a briefing on the matter of Euro 5.
The abolishing of the income tax exemption on Madaraba was also discussed in the meeting. The committee opposed the decision to abolish the Madaraba income tax exemption. The committee recommended the restoration of the income tax exemption on Madaraba at its previous level.
The FBR officials also briefed the committee on the matter of dealing with the Business Accounts. According to the bill, business accounts will now have to be declared to the FBR. Those who do not declare their accounts will be penalized, for which the minimum fine will be Rs. 0.1 million and imprisonment. The Chairman Committee sought revised details about the tax on transactions from the FBR.
The FBR officials also apprised the committee that the customs duty on 240 chemical tariff lines has been reduced, and five percent duty on 240 types of raw materials related to pharmas has been also abolished.
They said that taxes have also been reduced to promote tourism in the country. The duty for adventure tourism has been reduced by 50 percent and additional duty has been abolished, they said.
Senator Farooq H. Naik was disappointed that all the relief for tourism had been given to the hilly areas. He said that relief should also be given for the coastal areas in Baluchistan and Sindh. The FBR official replied that all this relief had been given on the recommendations of the provincial tourism authorities.
While addressing the members of the committee, the Chairman NTC said that duty on paper has been reduced this year, and added that relief has also been given to the dairy industry.
She said that the HRC is not made in Pakistan, and the regulatory duty on HRC has currently been reduced from 12.5 percent to 5 percent.
She also stated that relief has been given to the steel industry, said that the duty on those that had been 20 percent has been reduced to 16 percent, and the duty on those which had been 16 percent has been reduced to 11 percent.
The FBR officials said that there are two categories of manufacturing SMEs (small and medium enterprises) — Category One has a turnover of Rs. 100 million, and Category Two has a turnover of Rs. 250 million.
Senator Mandviwalla objected to the current turnover. The committee members unanimously said that the turnover had been 250 million 14 years ago and should be increased now. It proposed to increase the turnover of the SMEs to Rs. 400 million.
The committee will meet again tomorrow for further deliberations on the Finance Bill.