15pc GST on bricks, blocks under study

ISLAMABAD, March 18: The government is considering a proposal to levy 15 per cent General Sales Tax (GST) on bricks and cement blocks from the next financial year.

Well-placed sources told Dawn on Tuesday that the proposal was being under consideration following the pressure from the International Monetary Fund (IMF) to bring more items under sales tax net.

The expansion of tax net was one of the Fund's conditionalities under Poverty Reduction and Growth Facility (PRGF).

The sources said that the Fund's officials were of the opinion that, if GST levied, the sector would generate maximum revenue.

According to the sources, the government had levied a fixed amount of sales tax in 1996 on the brick kiln per month. An amount of Rs2750 per kiln was charged from kilns located in the jurisdiction of districts of Multan, Faisalabad, Lahore, Rawalpindi and Islamabad Capital Territory. In other parts of the country the amount was Rs1375, while small brick kilns were to pay Rs440.

Following the persistent pressure from the stakeholders, the government had to withdraw the levy through the finance ordinance of 1998.

The sources said it would again be a futile exercise as the sector had failed in raising maximum revenue.

Official statistics made available to Dawn showed that the tax authorities raised an amount of Rs0.283 million sales tax from cement blocks in 1996-97; Rs0.433 million in 1997-98 and Rs7.830 million in 1998-99.

The revenue generated from bricks was Rs19.984 million in 996-97; Rs5.873 million in 1997-98 and Rs12.580 million in 1998-99.

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