ISLAMABAD (June 23 2004): The government has decided to cut CVT from 0.1 percent to 0.01 percent, in addition to two presumptive withholding taxes of 0.005 percent on each buyer and seller, adjustable withholding tax of 0.005 percent and 10 percent withholding tax on COT.
Finance Minister Shaukat Aziz, while winding up general debate on Federal Budget in the National Assembly, said that customs duty on computer parts has been waived and on iron and steel brought down to 5 percent. Withholding tax on tractors is reduced to zero from 2 percent; they can also be brought in gift scheme from abroad.
Powers of sales tax officers have been curtailed and dispute resolution rules would be subjected to committees taking private sector as members.
The minister said the recommendations made by the members of the Senate have been duly considered. The Senate had made 32 recommendations out of which 20 were related to CBR, 14 of these recommendations have been accepted.
Based on the recommendations of the Senate, the system of Alternate Dispute Resolution has been further streamlined. Now the Central Board of Revenue, in all cases, referred to it under this provision will constitute committees, for resolution of the disputes. In addition, it has been made mandatory that the private sector representatives must be two in number.
The new provision whereby the officers of sales tax were proposed to have the assistance of Customs, Central Excise, civil armed forces and the police has been omitted to prevent any misuse of such authority.
The Capital Value Tax was proposed to be levied at 0.1 percent of the purchase value of shares traded in stock exchanges registered in Pakistan. The members of the stock exchanges agitated against this levy, which also caused a fall in the index of the bourses.
In order to resolve this issue, the government constituted a committee comprising of all the three chairmen of the stock exchanges, representative each from the Securities and Exchange Commission of Pakistan and the Central Board of Revenue.
Based on the recommendations of the committee, the original proposal would be amended as under:
CVT at 0.01 percent on the purchase of shares to be collected by the stock exchanges.
1-Presumptive withholding of income tax at 0.005 percent on the purchase value of shares in lieu of the commission income earned by members of the stock exchanges.
2-Presumptive withholding of income tax at 0.005 percent on the sale value of shares in lieu of the commission income earned by members of the stock exchanges.
3-Adjustable withholding tax at 0.005 percent traded in stock exchanges on behalf of the clients in respect of trading of shares.
4-Withholding tax at 10 percent on carryover transaction (Badla).
The aforesaid proposals have been agreed in principle and the Finance Bill in this context has been amended accordingly.
Omar Iqbal Pasha, Chairman Islamabad stock exchange, has appreciated the decision saying that it is win-win situation where the brokers and investors would be safe form any harassment and questioning and CBR would get revenue without any extra effort. The total collection from this tax would be Rs 1.87 billion, he said
As for Customs, on recommendations of the Senate, the government has decided to withdraw the levy of 5 percent customs duty on the import of computer parts. Duty on computers will continue at 5 percent to promote local assembly by SMEs.
It has, however, been decided to grant a concession of customs duty in the import of composite diagnostic kits for HIV and Hepatitis. Customs duty on the import of tinned iron or steel and raw materials for the local manufacture of high-pressure laminate sheet (Formica) shall also be reduced to 5 percent to facilitate the local industry.