GST on sugar may be increased

Imposition of FED on gas, hike in customs duty are also on the cards


Our Correspondent May 24, 2019
PHOTO: REUTERS

ISLAMABAD: The federal government has permitted an increase in the general sales tax (GST) on sugar in the budget for fiscal year 2019-20.

Additionally, it has also agreed on imposing federal excise duty on gas besides levying sales tax on the electronics and print industry and hiking additional customs duty in the next fiscal year.

In this regard, a high-level meeting took place at the FBR in which the proposal for imposing new taxes, amounting to Rs334 billion, was discussed. The breakdown suggests the imposition of Rs150 billion in sales tax, Rs95 billion in customs duty and Rs150 billion in federal excise duty in the upcoming budget.

After approval from parliament, there will be a hike in prices of sugar, gas and other commodities. During the meeting, it was also decided to raise the federal excise duty on cigarettes and beverages.

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Furthermore, it was agreed to impose 5% customs duty on imported LNG, which presently enjoys 3% relaxation. Hence, the relaxation will be withdrawn and gas, electricity and industrial commodities will become costly. However, the relaxation in customs duty on the import of plant and machinery by exporting industries will continue. Final decision will be taken after approval of the finance adviser.

Special preference will be given in the federal budget to measures which will help raise revenues. To achieve this, the relaxation in the GST on sugar will be withdrawn and sales tax will be imposed at the market rate.  The retail price tax system will be introduced for the electronics and print industry and sales tax will be imposed according to wholesale prices of commodities in related industries.

A proposal was also discussed to introduce the Unified Value Added Tax (VAT) along with the suggestion of imposing federal excise duty on gas due to which the revenue could rise up to Rs60 billion. Similarly, the hike in taxes on cigarettes and beverages will add Rs37 billion to the revenues. Apart from this, there was also a recommendation to end the withholding tax relaxation for the cottage industry, which would fetch Rs10 billion in sales tax.

Furthermore, the introduction of Point of Sales system for the wholesale market was also discussed. Following its implementation, it is expected to bring Rs10 billion in sales tax.

 

Published in The Express Tribune, May 24th, 2019.

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