The Federal Board of Revenue (FBR) has proposed the imposition of a 17 percent sales tax on the import of goods received in the event of a natural disaster.
The proposal to withdraw the sales tax exemptions on the imports of all the goods received in the event of a natural disaster was made in the Finance Supplementary Bill, 2021.
The member of the Inland Revenue Policy informed the Senate Standing Committee on Finance Revenue and Economic Affairs during the clause-by-clause reading of the bill that the government will withdraw the sales tax exemptions on the imports of all the goods received in the event of a natural disaster as directed by the International Monetary Fund (IMF).
According to the Tax Expenditure Report 2021-22, the FBR had given Rs. 57.20 million worth of tax exemptions from the Income to National Disaster Risk Management Fund. Additionally, it had exempted Rs. 50 million on the imports of all the goods received as gifts and relief consignments, including goods imported for the president’s fund for Afghan refugees, relief goods donated for Afghan refugees, and gifts for the president’s fund in the event of a natural disaster or other catastrophes.
The FBR has also exempted Rs. 5 million for the general masses on the import of 49 goods received in the event of a natural disaster. Furthermore, it has reportedly exempted Rs. 37 million Customs duty on the relief goods donated for free distribution, including plants, machinery, and equipment imported by way of donation for installation in the earthquake-hit districts as certified by the ERRA/National Disaster Management Authority.
The Member IR Policy had stated that government will give the tax exemptions if some country or development institution provides goods for a natural disaster. According to the rules, the federal government may specify by notification in the Official Gazette whenever circumstances exist for it to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, and the implementation of bilateral and multilateral agreements are charged to tax at the rate of zero percent.
Similarly, the government is also empowered to give exemptions whenever circumstances exist for it to take immediate action for national security, natural disasters, national food security in emergency situations, and the implementation of bilateral and multilateral agreements, by notification in the Official Gazette.
