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No plan to levy 15 percent general sales tax on food items: CBR

ISLAMABAD (April 11 2003) : The Central Board of Revenue (CBR) is not considering any proposal to do away with exemption by imposing 15 percent general sales tax (GST) on food items in the next budget 2003-04, dispelling the impression created by certain quarters in this regard, official sources said here on Thursday.

The sources were commenting on apprehensions that the International Monetary Fund (IMF) and the CBR were mulling to tax food items in the coming budget.

Neither, the IMF has proposed withdrawal of GST exemption on food items nor the tax authorities would consider such proposal as it was an internationally accepted principal across the world to exempt food items, the sources maintained.

GST exemption would continue during fiscal 2003-04 on vegetables, fruits, eggs, poultry, fresh and dried milk, bread, including Nans, Chapatties, Sheermal, Bun, Rusk, ice and water, table salt, red chilies, ginger, turmeric, potatoes, garlic and all other exempted food items as per the Sixth Schedule of the Sales Tax Act, 1990.

Similarly, the CBR would continue levy of 15 percent tax on retail price of juices, beverages, syrups/squashes and other items specified in the Third Schedule of the Sales Tax Act, 1990.

The sources said that the food items were the basic necessity of common man, which would not come under GST regime in the next budget. Most of the countries have adopted policy to exempt food items of daily use, which would remain intact in Pakistan.

When asked whether imposition of GST was a tax measure proposed by the IMF for budget, they said that the fund has specified all tax proposals in the IMF Fiscal Affairs Department (FAD) report drafted by Richard Highfield and other four members of the IMF team where taxation of food items was not mentioned.

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