ISLAMABAD: In a bid to collect more revenue from petroleum products, the Federal Board of Revenue (FBR) has made all necessary arrangements for issuance of another SRO to levy 5% more sales tax on petroleum products.
FBR issued SRO 1152 (I) 2014 in December to make up for some of the shortfall in sales tax revenue due to falling prices of petroleum which was estimated around Rs 68 billion. Through the said SRO rate of sales tax was increased from 17% to 22% for motor spirit including HOBC, kerosene, light diesel oil and High speed diesel oil and expected revenue out of increased rate of sales tax was Rs 17 billion.
“In this regards the relevant wing remained opened late at Friday night and SRO in this regards is likely to be issued today, as a lengthy process including getting the SRO vetted by Law Division as well as getting it printed for Gazette of Pakistan is to be followed” a well placed source at FBR told Customs Today on Friday.
The source said that a lot of discussions had been held in this regard at concerned quarters and finally it was decided to increase the rate of existing sales tax on POL products from 22% to 27%. The source said that FBR Member Inland Revenue-Operations Ashraf Khan would issue the said SRO.
“The Finance Ministry and FBR on this issue are of the viewpoint that volume of revenue expected in the Finance Bill 2014-15 from the POL products had reduced to one fourth due to decreased prices of POL products in the local market as a result of reduced prices in international market” the source added.
The source said that both the Finance Ministry and FBR also took plea of Indian government’s act of increasing the rate of sales tax on petroleum products five times in a bid to refuse passing the benefit of reduced prices of POL products in the international market. “Earlier, government expected revenue collection at the rate of around Rs 100 per liter of POL which now is being collected at reduced prices of Rs 74 per liter” the source elaborated.
“The Indian government raised the rate of sales tax time to time but we are doing this only second time”. The source said that the issue of legality of SROs by the government had already been much debated in both political and public circles saying that the Article 7 of the Constitution, state was defined to include besides parliament any local or other authorities in Pakistan as are by law empowered to impose any tax. This article suggests that the tax can be imposed pursuant to the powers conferred by parliament by an authority other than the parliament.
“The federal government may subject to such conditions and restrictions as it may impose notification in the official gazette declare that in respect of any goods or class of goods imported into produced or any taxable supplies made by a registered person or a class of registered persons to tax shall be charged collected and paid in such manner a such higher or lower rate or rates as may be specified in the said notification,” the source read out the relevant clause.
These powers have earlier been exercised by the Federal government through several SROs” the source said adding that in the past too, SROs issued under the same clause imposed sales tax at higher rate of 20% on 60 times and 17.5% on nine times.
