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Saturday, April 13, 2024

FBR given authority to cut utility connections of businesses

FBR has now the authority to cut utility connections including electricity and gas of large businesses

At a meeting of the Senate Standing Committee on Finance, the Federal Board of Revenue (FBR) was given authority for bringing all the 29,000 jewelers into the obligatory general sales tax compliance over integrated points of sale (POS) and powers for disconnecting electricity and gas to over 2.3 million large (tier-1) traders in case they fail to register for GST or link up with POS.

Read more: FBR collects Rs 5.4 trillion in taxes

As shared by the Dawn, the meeting — presided over by PPP Senator Saleem H. Mandviwalla — was told that there were 29,000 jewelers in the country but only 22 were registered and integrated with the POS system, which was unfair.

However, the tax authorities claimed that all the jewelers exist in the category of tier-1 traders due to the precious and high-priced goods they were selling, even in small stores, and all would have to comply with the sales tax net.

In addition, almost 2.3 million retailers or traders associated to the tier-1 category are unregistered currently. They would be obligated to pay Rs3,000 monthly tax based on up to Rs30,000 monthly electricity bill, rising up to Rs10,000 per month tax as the bill increases.

Read more: FBR to impose more taxes?

Furthermore, the FBR’s board is also authorized under the new budget to raise the tax rate to Rs50,000 per month through electricity bills. Also, it can order the discontinuation of electricity and gas if these big retailers fail to be listed or integrated with the computerized system of FBR.

On the other hand, the FBR team, led by its chairman Asim Ahmad, also claimed before the committee that the draft finance bill put before parliament for discussion had differences from the one agreed by the federal cabinet, as some points had to be changed after the draft finance bill had gone to press and submitted to parliament. However, they agreed to come up with a revised draft during the discussions of the committee.

Executives on the sidelines of the Sena­­te committee said, “the IMF had raised written objections over certain budgetary measures, particularly those pertaining to personal income tax, which increased the taxable income limit to Rs1.2 million per year and red­uced income tax rates on high-end earners.”

Also, these executives shared that the government was involved in several workings and aimed to protect the lowest income slabs from tax burden and suggested progressive tax system and raising tax rates on those who are earning more than Rs5-6 million in yearly income.

However, they cautioned that the revenue effect of such a change might not be sufficient as fewer people exist in those categories in comparison to a large base in the 1.2m income category. Some other benefits and incomes of other sectors could be considered to adjust the gap.