FBR empowered to cut electricity, gas connections of large traders.

ISLAMABAD -- As the government received some written objections from the International Monetary Fund (IMF) to the federal budget, the Ministry of Economic Affairs (MEA) on Tuesday protested in parliament over subjecting concessional international loans, grants and consultancies to general sales tax, as donors are shying away.

At a meeting of the Senate Standing Committee on Finance, the Federal Board of Revenue (FBR) also secured clearance for bringing all the 29,000 jewellers into the compulsory general sales tax compliance through 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.

The meeting - presided over by PPP Senator Saleem H. Mandviwalla - was told that there were 29,000 jewellers in the country but only 22 were registered and integrated with the POS system, which was discriminatory. The tax authorities said all the jewellers fell in the category of tier-1 traders because of the precious and expensive products they were dealing in, even in small shops, and all would have to come into the sales tax net.

Also, about 2.3 million retailers or traders identified under the tier-1 category are unregistered at present. They would be subjected to Rs3,000 monthly tax based on up to Rs30,000 monthly electricity bill, increasing up to Rs10,000 per month tax as the bill goes up.

The FBR's board is also empowered under the new budget to increase the tax rate to Rs50,000 per month through electricity bills. It can also order the disconnection of electricity and gas in case these large retailers fail to be registered or integrated with FBR's computerised system.

The FBR team, led by its chairman Asim Ahmad, also conceded before the committee that the draft finance bill placed before parliament for discussion was quite different from the one approved by the federal cabinet, as certain changes had to be made after the draft finance bill had gone to press and submitted to parliament. However, they undertook to come up with an updated draft during the course of the committee's discussions.

Officials on the sidelines of the SenaAAte 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 redAuced income tax rates on high-end earners.

These officials said the government...