Latest news with #SyedNaveedQamar
Express Tribune
13 hours ago
- Business
- Express Tribune
Elite clubs come under tax ambit
Listen to article The government's plan to ban economic transactions by ineligible persons from the start of new fiscal year has faced a setback, as a National Assembly panel found the online portal being developed to determine the eligibility criteria for carrying economic transactions was far from the finishing line. National Assembly Standing Committee on Finance Chairman Syed Naveed Qamar gave his critical post-review assessment on Friday after reviewing the government's much-trumpeted plan to catch tax evaders. The committee, nonetheless, supported the government's proposal to impose income tax on the earnings of elite recreational clubs, like Islamabad Club and Guns and Country Club that charge more than Rs1 million membership fees. Work on the online platform is far from the finishing line, said Naveed Qamar, a day after he and other committee members took a briefing of the new system in a visit to the Federal Board of Revenue headquarter. The statement made by the chairman after reviewing the system shows that FBR has failed to develop a credible online system. The government has proposed to ban economic transactions by those whose assets and wealth statements do not support buying a plot, a car, invest in securities or maintaining bank accounts. The committee had linked the approval of the powers with the FBR's ability to develop a system that is free from the exploitation of the taxpayers. The FBR had earlier promised to develop this system by April this year. The FBR's briefing showed that it was merely a prototype system that cannot be described fully functional and does not have the ability to achieve the intended purposes, said Usama Mela, the member of the standing committee and the PTI MNA. In his post-budget press conference, Finance Minister Muhammad Aurangzeb had warned that if the Parliament did not approve the proposed amendments, the government may have to impose Rs400 billion to Rs500 billion in new tax measures. But his organization has not developed a trustworthy system. There is still a chance that the National Assembly committee will approve these amendments but their enforcement will be linked with the development of a credible online platform. The new system determining the eligibility criteria of taxpayers to undertake economic transactions would not be enforced from July 1st, the Chairman FBR Rashid Langrial told the standing committee. He further explained that the current system will continue until a new system is put in place. The government has already proposed in the law that these new conditions will take effect after the approval of the federal government. The chairman of the standing committee proposed that initially the FBR should apply the new system to a set of taxpayers instead of fully rolling it out. The chairman FBR agreed to the recommendation. The government has proposed that only those people can buy cars, plots, invest in securities who have sufficient declared white legal resources to buy these assets and maintain bank accounts According to the bill, the ineligible persons would not be allowed to withdraw cash from their bank accounts beyond a certain limit. However, it gives certain relaxations to them, including the freedom to procure up to 800cc vehicles, buses, trucks and tractors and invest in shares up to a certain limit. The new system was conceived by Rashid Langrial in order to collect due taxes from people, either filers or non-filers. An eligible person can make major purchases of up to 130% of the value of cash and assets, declared in his last tax return and the wealth statement or he can justify any new source. Recreational Clubs The FBR informed the standing committee about an amendment in the law to capture the incomes of the elite clubs, which are exempted from paying income tax. The government has proposed to exclude these recreational clubs charging over Rs1 million for the membership fee from the purview of the non-profitable organizations. The Islamabad Club is very much coming in the tax net, said Muhammad Aurangzeb. The club had been built as a recreational facility for the bureaucrats and diplomats. Over the years, its fee was exorbitantly increased to many millions of rupees. Its membership is being offered to only the richest or the influential people, denying others from availing facilities being built on the state land. The standing committee also rejected a government budget proposal of indirectly charging income tax from the farmers despite their income cannot be taxed by the federal government.
Express Tribune
2 days ago
- Business
- Express Tribune
NA panel reviews FBR powers
The National Assembly Standing Committee on Finance on Thursday directed the Federal Board of Revenue (FBR) to incorporate safeguards before closing bank accounts of unregistered businesses, amid widespread tax evasion and underreporting by businesspeople. The committee, which met here with its chairman Syed Naveed Qamar in the chair, reviewed the FBR's proposed measures to enforce sales tax compliance, including the disconnection of utilities and temporary freezing of bank accounts for non-filers. During the meeting, FBR Chairman Rashid Mahmood Langrial gave a briefing to the committee. He said that unregistered businessmen would not be able to operate a bank account under sales tax laws, adding that such a person would be served a notice prior to the closure of the bank account. "The bank account of an unregistered person will be reactivated within two days after registration," he said. He revealed that out of 300,000 industrial units in Pakistan, only 30,000 to 35,000 were registered with the authorities. Explaining reasons, he acknowledged that the tax rate in Pakistan was high. "One-third of manufacturers are not registered in sales tax. People who even come under the tax net do not file returns," Langrial said. "Those who pay taxes underreport their incomes," he told the committee. "Electricity theft alone costs Rs500 to 600 billion every year." When asked how the FBR would identify businesses not paying sales tax, the FBR chairman explained that the income declared for income tax purposes would be used to estimate the volume of sales, supplies and overall business activity. Action would then be taken against individuals who fail to register, he added. Committee member Javed Hanif supported the FBR's proposals but the committee chair cautioned against enacting a law aimed at catching tax evaders if it also adversely affects compliant businesses. Another Committee member, Sharmila Farooqi, suggested that instead of making the penalties more stringent, the taxpayers should be given incentives. "Reduce the tax rate. It will broaden the tax net and encourage the people to get them registered. Finance Minister Muhammad Aurangzeb replied that the tax threshold and process would be improved. however, he made it clear that tax exemptions and amnesties would not be given anymore. "The time for tax exemptions and amnesties has passed. People have to be brought into the tax net." Langrial urged the committee to allow the FBR to temporarily deactivate the bank account of unregistered businessmen. The committee, however, directed for including safeguards in the process. Petroleum levy Meanwhile, the committee approved a proposal to increase the rate of petroleum development levy (PDL) to Rs90 and impose carbon levy on petrol, diesel and furnace oil. Finance Ministry officials told the committee that there was a proposal to impose the PDL on furnace oil as well. The officials said Rs100 billion in revenue was expected from the PDL on furnace oil. They added that 1.2 million tons of furnace oil was imported for 1,000MW Independent Power Producers (IPPs). The Power Ministry secretary said that the target of PDL recovery in fiscal 2025-26 was set at Rs1,468 billion. The Finance Ministry officials said that the government expected Rs45 billion in revenue through the carbon levy. The committee chair asked how much amount the Centre would get if the levy was turned into a carbon tax. On that the officials said that the amount in that case would be Rs18 billion. The committee was informed that the entire amount of a levy went to the federal government, but in taxes, provinces also get share. The chair stressed that the committee was not taking any decision regarding a levy or a tax on petroleum products. The industries secretary told the committee that Rs10 billion from carbon levy would be spent of the promotion of electric vehicles. He added that 30% of the vehicles would be shifted to electric vehicles by 2030. The production of all types of vehicles in the country is around 150,000, the officials said, adding that there were 76,000 electric vehicles in the country at present. "In the next five years, the production of electric vehicles will be increased to 2.2 million," the secretary said.
Express Tribune
2 days ago
- Business
- Express Tribune
FBR to block bank accounts, cut utilities for unregistered businesses
Listen to article In a bid to expand the tax base, the federal government has proposed tough new measures under the Finance Bill, seeking to restrict unregistered businesses from operating bank accounts and to disconnect their electricity and gas connections, Express News reported on Thursday. The National Assembly's Standing Committee on Finance on Thursday granted conditional approval to the move, directing the inclusion of procedural safeguards. During a meeting of the committee chaired by MNA Syed Naveed Qamar, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed lawmakers on the proposed amendments. He stated that businesses not registered for sales tax would no longer be allowed to operate bank accounts. Notices would be issued prior to any such action, and accounts would be reactivated within two days of registration. Read More: Govt slaps Rs415b taxes to raise Rs2.2tr Langrial further informed the committee that non-registered Tier-1 retailers would face disconnection of power and gas utilities while revealing that of the 300,000 industrial units operating in Pakistan, only 30,000 to 35,000 were currently registered with the FBR. 'Tax rates are admittedly high, and compliance remains low,' he said. 'Electricity theft alone costs the national exchequer Rs500 to Rs600 billion annually.' Responding to a question on how unregistered businesses would be identified, the FBR chairman said income tax filings and business volume would be used to assess eligibility for sales tax registration. The committee was also told that a significant number of businesses, even among those registered, underreport sales and production. 'One-third of manufacturers are not even registered,' Langrial said. 'Those that are often engage in under-filing.' Committee member Javed Hanif expressed support for the FBR's proposals under Sections 14A(C) and 14A(D) of the Sales Tax Act. However, Chairperson Qamar cautioned that any new law should not be applied in a manner that could unjustly penalise unintended parties. Also Read: Govt to raise tax evasion fines to Rs5m for shopkeepers Finance Minister Muhammad Aurangzeb, also present at the meeting, said the government had no plans to offer further tax amnesties or exemptions. 'That era is behind us,' he remarked. 'Our focus is to bring more people into the tax net and to improve thresholds and procedures.' The committee advised the FBR to include clear safeguards before proceeding with temporary account deactivations. The board was also asked to present a revised draft incorporating those protections. Langrial acknowledged that many business models are based on tax evasion and sought permission to temporarily suspend bank accounts rather than permanently freeze them. He suggested that any decision on permanent closures should rest with a designated committee. The proposed crackdown is part of a broader reform package aimed at increasing tax compliance in line with Pakistan's commitments under its programme with the International Monetary Fund (IMF).
Express Tribune
4 days ago
- Business
- Express Tribune
Taxes on hybrid cars, solar panels being withdrawn
Listen to article The National Assembly Standing Committee on Finance on Tuesday unanimously rejected the proposed 18% sales tax on the import of solar panels, while the government also announced the withdrawal of another controversial measure to increase sales tax on hybrid vehicles, reversing both the anti-environment initiatives. The committee in its meeting, chaired by Pakistan Peoples Party's (PPP) National Assembly member (MNA) and former finance minister Syed Naveed Qamar, also raised questions on the proposed new bill, the Digital Presence Proceeds Act 2025 but did not announce its judgment. The rejection of the 18% sales tax on import of solar panels and its parts, as announced by Qamar, is the first such rejection by the committee after it started discussing the Finance Bill. Unlike the Senate, the decisions of the National Assembly or its standing committee are binding in case of the Finance Bill. The government had estimated Rs20 billion in revenues from the 18% sales tax on the import and supply of photovoltaic cells, whether assembled or not. Since the IMF had not endorsed the proposal, the rejection by the committee will not have any adverse implications for the IMF programme. During the committee meeting, Federal Board of Revenue (FBR) Chairman Rashid Langrial argued that sales tax had already been levied on the local assembly of the solar panels; therefore, the rejection of the import stage tax could put the local industry at a disadvantage. However, he could not give firm figures about the share of the local industry in the total sales but said that a very few percentage was supplied locally. "If the government did not accept our rejection, the National Assembly will veto it," Qamar said. Qamar asked the government to find other ways for incentivising the local industry. Finance Minister Muhammad Aurangzeb said that the era of giving subsidies had ended. On that Qamar reminded him that the government had just announced subsidies in the budget for electric vehicles. In the budget, the government had imposed 1% to 3% car engine levy to raise Rs10 billion for funding the electric vehicles. "It is a cross subsidy on electric vehicles", Aurangzeb said. "It is still a subsidy funded by someone else," retorted Qamar. The government has long been trying to discourage the use of solar panels – a source of cheaper electricity – over the government-sold expensive grid-based power. "No political party in the National Assembly has supported the 18% tax and the government will have to withdraw it," Qamar said. The finance minister acknowledged the feedback. Hybrid cars Meanwhile, the government on Tuesday announced the withdrawal of the proposed increase in the sales tax rate from 12.5% to 18% on hybrid cars of up to 1800 cc. This would result in a loss of Rs7 billion potential revenue. The reduced sales tax rate of 12.5% on the hybrid cars would stay, FBR Chairman Langrial stated. Although, he told the committee, the finance minister had announced it in the budget speech, the tax would not be increased. It is the second time in the past one year when the government announced to increase the sales tax rate on hybrid cars but subsequently withdrew it before the approval of the budget by the National Assembly. Under the automobile policy, the government cannot increase the rate till June 2026. However, the FBR chairman refused to withdraw the proposed increase in the sales tax rate for middle income group's up to 850 cc cars. In the budget, the government has proposed to increase the sales tax rate on 850 cc cars from 12.5% to 18%. Langrial said that if a person can buy a Rs3 million small car, he can also pay 18% sales tax. It seems that after the budget small cars will become expensive but the luxurious SUVs will become cheaper, remarked MNA Usama Mela of the Pakistan Tehreek-e-Insaf (PTI). The committee had a heated discussion on the issue of giving policing powers to the FBR and the fear of its abuse by the taxmen. The entire Finance Bill is like declaring martial law on businesses, remarked PPP MNA Nafisa Shah. However, the chairman FBR took an exception to labelling the bill as a piece of martial law work. "The harsh words like martial law have been used but I want to clarify that I work for the democratic government," Langrial said, before opting to leave the meeting hall. The standing committee also showed its discomfort over giving FBR's authority to the local police to trace the non-tax paid cigarettes and confiscate those. The members observed that this would give another window to the police to extract money from the people. "Poor people smoke to relieve stress but the rich can afford diet coke," Sharmila Faruqi remarked. The committee also questioned the government's new bill, the Digital Presence Proceeds Act. The bill has been introduced to charge 5% tax on the value of online payments made to foreign digital companies like Netflix and Amazon. FBR Member Dr Najeeb Memon said that the quantum of foreign payments was much more than Rs300 billion and the government could easily get Rs15 billion in revenues. He said that the credit card payments to firms like Netflix and Amazon stood at Rs300 billion this year. The size of tax-free sales by Temu was also Rs4 billion. The committee members called for bring the bill as a separate law instead of making it part of the Finance Bill.
Business Recorder
4 days ago
- Business
- Business Recorder
NA panel rejects 18pc GST on solar panels
ISLAMABAD: The National Assembly Standing Committees on Finance and Revenue, unanimously, rejected the proposal of imposing 18 percent sales tax on solar panels import, terming it unacceptable amid rising energy costs and public concern, as it would be counterproductive. The parliamentary panel met with Syed Naveed Qamar in the chair here on Tuesday, which gave its nod for Digital Present Proceeds Tax Act, 2025, proposing a new tax @ five percent on proceeds of digitally ordered goods, envisaging to safeguard taxing rights in the digital world. The Federal Board of Revenue (FBR) admitted that the removal of less than 18 percent tax rate on motor vehicles will result in price escalation. The FBR chairman hinted of taking additional measures if GST on solar is withdrawn to cover Rs40 billion i.e. Rs20 billion revenue loss and Rs20 billion subsidy. The FBR chairman told the committee that both import and supply of photovoltaic cells whether or not assembled in modules or made up into panels is exempt from sales tax. This exemption disproportionality benefits commercial importers while the local industry is been rendered uncompetitive due to the absorption of input tax costs on purchase. During the session, the committee, unanimously, opposed the FBR suggestion to impose a sales tax on solar panels, observing that since the budget proposal, solar panel prices in the country already skyrocketed. The committee chairman stated that all political parties represented in Parliament were against the move to tax solar energy products, which are increasingly being adopted by households and businesses as an alternative to costly electricity. Federal Finance Minister Muhammad Aurangzeb, responding to the objections, said that some of the committee's recommendations had been noted for review. Qamar confirmed that the committee had unanimously rejected the FBR's proposal to levy 18 per cent sales tax on solar panels, while terming it counterproductive. 'Tax should not be slapped over solar panels if you talk about the renewable energy,' Mirza Ikhtiar said. 'Imported solar panels are cheaper than the locally manufacture, which are also sub-standard in quality,' he said. Shahram Khan Taraki also termed the government policy confused and recommended for transfer of technology along with solar panels import. The FBR chairman revealed that over invoicing Rs65 billion has been established which comes under money laundering and resulted in taking dollars out of the country in solar panel imports. Under the Digital Presence Proceeds Tax Act, foreign vendors providing e-commerce goods will be taxed at five percent. Under this proposed Act, payment intermediaries including banks and financial institutions will collect tax on digital payment made to foreign vendors supplying goods into Pakistan. Services are not covered under this act. The digital advertisement of offering vendors, ie, Temu in Pakistani market by platforms such as Google will also be taxed in consistency with Pakistan taxing rights. The committee was informed that Temu earned Rs4 billion from the Pakistani market but payed no income tax. While briefing the committee on the removal of less than 18 percent tax rates on motor vehicles, the FBR informed the committee that it is not applicable on electrical vehicles. The FBR informed that the committee under the International Monetary Fund (IMF)'s arrangement, they are bound to increase the reduced rates in sales tax. The current rate above five percent would increase to 10 percent, while the above 10 percent would be increased to 18 percent and this would result in increase of motor vehicles. The committee rejected the proposal of the FBR to establish a separate Customs Command Fund (CCF) for the customs officials. Copyright Business Recorder, 2025
