The federal Cabinet will debate over the tax laws (fourth amendment) bill that is aimed at abolishing Rs. 350 billion tax exemptions on a number of items by the Federal Board of Revenue (FBR).
Sources told ProPakistani that the FBR will present the tax laws (fourth amendment) bill for approval during the meeting of the Cabinet on Tuesday under the terms that were agreed upon with the International Monetary Fund (IMF).
They disclosed that the government will abolish tax exemptions on imported mobile phones, computers, silver, gold, and other jewelry, and will restore 17 percent of the standard rate of the general sales tax. Additionally, the FBR will also withdraw 17 percent GST exemptions given on zero-rated items under the fifth schedule. However, the exemption will be continued for the exports-oriented sectors as well as the machinery under this schedule.
Moreover, 17 percent of the exemptions on the items in the sixth schedule will also be abolished, excluding basic food, medicine, live animals, educational, and health-related items. Besides, the sales tax exemption on agricultural commodities, tractors and fertilizers, and pesticides will continue, while the standard sales tax will also be levied on mobile phones under the ninth schedule.
The sources added that the Petroleum Development Levy target will be reduced from Rs. 600 billion to Rs. 356 billion. However. the government will increase the levy by Rs. 4 per month.
The tax collection target for the current financial year 2021-22 has been increased from Rs. 5,829 billion to Rs. 6,100 billion, while the proposal to reduce the development program by Rs. 200 billion (Rs. 900 to Rs. 700 billion) is also part of the proposed amendment bill.
The amendment bill will be presented in the National Assembly for approval after getting a nod from the Cabinet, as per the sources.
Meanwhile, the IMF has asked Pakistan to approve an amendment bill from the Parliament regarding the abolishment of the Rs. 350 billion exemptions.