Finance Bill 2022: Senate adopts nearly 27 recommendations

ISLAMABAD, Jun 23 (APP): The Senate on Thursday adopted 27 recommendations related to Finance Bill 2022 and proposed multiple recommendations on the public sector development program.

The recommendations on the Finance Bill, 2022 would be forwarded to National Assembly that would decide whether or not these recommendations are to be incorporated in the money bill.

At the Senate sitting, Chairman Senate Standing Committee on Finance, Revenue and Economic Affairs Saleem Mandviwala presented his report on the Finance Bill 2022 that was adopted by the House. Senate Chairman Sadiq Sanjrani presided over the sitting.

Speaking on the floor of the House, Saleem Mandviwala appreciated the role of all members of the Standing Committee and team of Ministry for extending their support to the finance panel in preparation of the recommendations.

The Senate recommended to the National Assembly that this act is against the principle of Sales Tax and Value added tax and as such sales tax should be collected from the all the sales points. However, exemption on the real small retailer i.e. with shop size of 6×6 or 6×8 non air condition retailer should be based on their electricity bill.

The Senate recommended to the NA that retrospective exemption of Federal Excise Duty to Newly Merged Districts should be provided and in order to promote economic prosperity and implement the true spirit of the exemptions promised, all previously uncollected taxes on sales including electricity bills to be also exempted for the year 2019 to 2020. With the Passage of 25th Constitutional Amendment, FATA and PATA stood merged in the provinces of Khyber Pakhtunkhwa and Balochistan. A phased approached was needed for the full application of fiscal law to erstwhile Tribal/Newly Merged Districts (NMDs) therefore a decision was made to exempt all taxes which would have not applied had Article 247 of the Constitution not been omitted under the Constitution (Twenty-Fifth Amendment) Act, 2018. However, against the spririt of this decision, Federal Excise Duty was imposed in NDMs brining the excisable goods produced in these areas under the ambit of taxation. Furthermore, FED was also imposed on steel sector and ghee sector.
The Senate recommended to the NA that government should ensure the reduction of sugar content in sodas, juices energy drinks and iced teas for better human health.

The Senate recommended to NA that in (Annex-VI (Chapter 99 of Pakistan custom tariff against pct code 9942) for the words ‘special area government”, the word “Such states and territories as are or may be included in Pakistan shall be substituted.

The Senate recommended to the NA that exemptions of fifth schedule to the Custom Act, 1969 should be provided on the import of Railways item, from all duties and taxes.

In Sub-Clause (59), in paragraph (a) of Finance Bill, 2022, in the twelfth schedule, the Senate recommends to the NA that all price sensitive items should be added along with the entry related to coal in the table.
The Senate recommended to the NA that to give full effect to the amendments made in clause 3 (120 (B) of the Bill, 2022, it is proposed that tariff headings 9801.2000, 9801.5000 and 9805.8000 may be restored in the first schedule to the Customs Act, 1969 as were existing before its withdrawl vide Finance Act, 2018.
The Senate further recommended to the National Assembly that the provisions of clause 3 (1) ( c) (ii) of the Bill should either be omitted or its scope should be restricted to production and supply of electricity (PCT Code 2716.0000).

The Senate also recommended to the NA that the words “Hospitals run by Federal government/ Provincial govt” may be added in the said Sr. Nos 165 and 166 of the Table to Clause 3 (12) (A) ( g) of the Bill.

Senate recommended to the NA that the provision of section 37 of the Income Tax ordinance, 2001 omit Capital Gain Tax on immovable property or the amendment proposed in section 37 of the Income Tax Ordinance, 2001 vide Clause 5 (10) (a) of the Bill, 2022 may be withdrawn as it amounts to encroachment upon the provincial domain contrary to the provisions of the Constitution.
The Senate also recommended to the NA that the proposed provisions of Section 7E, as added vide Clause 5 (5) of the Finance Bill, 2022, may be omitted being unjustified and ultra-vires the Constitution.

The Upper House also recommended to the NA that the aforesaid provisos to section 60 A and 60 B may be omitted in line with the Sindh High Court judgement date 12.02.2018 in CP No.1313 of 2018.

Senate also recommended to the NA that the rate of AIT on cellular services be reduced to 8 %, as per the commitment made by the Government while introducing Federal Budget, 2021.

The Senate also recommended to the NA that FED rate on natural gas (PCT heading 2711.2000) be enhanced from Rs. 10/- per NMBTU to Rs. 20/- per NMBTU in view of the increase in the prices of Natural Gas since 2010.

Senate recommended to the NA that FED at 5% ad valorem be levied on Crude Petroleum Oils (PCT) heading 2709.000) and, with a view to avoiding any possible effect on the retail price of POL products, this FED may be collected in sales tax mode by adding Crude Petroleum Oils (PCT heading 2709.000) in the Table of the second schedule to the Federal Excise Act, 2005.

The Senate recommended to the NA that in the Sales Tax Act 1990, in Section 3(7), after the word “services”, the commas and words, other than the services liable to pay sale tax under sales tax under a provincial enactment,” may be added.

Senate recommended to the NA that Sr. Nos 14 and 15 may also be added in the Note appended to the said Table-II of the First Schedule to the Federal Excise Act, 2005.

The Senate further recommended to the NA that 17 % Sale tax on purchase of pharmaceutical raw material (APIs and Excipients) should be immediately withdrawn or zero rated and a negative list should also be provided for pharmaceutical sector to FBR to eliminate misuse of such raw materials.
Senate also recommended to the NA that Sale tax deposited by pharmaceutical Manufacturers since 15-January, 2022 amounting to over 40 billion should be immediately refunded without any conditions.

The Upper House recommended to the Na that goods imported by non-profit making institutions, and imported by or donated to hospitals run by the non-profit making institutions subject to the similar restrictions, limitations, conditions and procedure as are envisaged for the purpose of applying zero-rate of customs duty on such goods under the Customs Act, 1969, (IV of 1969).

Senate recommended to the NA that for raw hides and skins either FBR issue clarification that the same definition will apply in sales tax as per clause 46AA i.e. income tax or it is included in 6th schedule of sale tax.

Senate recommends to the NA that in clause (3), in sub clause (13), in paragraph (g), in the table, the entries at serial No. 80 shall be omitted and FBR should not hold the manufacturer accountable for any lapse of tax liability in supply chain of all types of lead and its scrap, when the manufacturer has duly made his payments through banking channel.

The Senate also recommended to the NA that import of aircrafts and its parts should be exempted from sale tax as neither this sales tax is recoverable or adjustable.

Senate recommends to NA that Senator Muhammad Talha Mahmood Foundation should be added in the 2nd scehedule for exemption of income tax like other non-profit organizations have been given.

The Senate recommended to the NA that credits be allowed to businesses and taxpayers engaged in IT Sector.

The Senate recommends to the NA that the following matters faced by different sectors concerning the Finance Bill, 2022 has been referred to the Anomaly Committee of FBR for their just and equitable redressal and FBR is also directed to report back to the committee regarding the resolution of all these referred matters. Imposition of tax upon sale of furniture based upon the covered area in tier 1, Grievance raised by the citizen’s developers association, Restoration of import tariff of fabric from 13 % to 24 % to prevent unnecessary import of fabric as highlighted by Pakistan Weaving Mills Association, Tariff rationalization of PET Plastic Value Chain as raised by BOPT Film Products by NOVATEX Limited, Re-evaluation of the assessment and revision of the tax imposed on bread from 17 % to 7.5 % raised by Bakers Association and Tax imposed on jewelry raised by jewelers Association.

The Senate also recommended to the NA that percentage salary increase from grade 1 to 16 should be greater than the percentage salary increased for grade 17 to 22.