ISLAMABAD: Federal Board of Revenue (FBR) Chairman Tariq Bajwa said that adjustment of increased general sales tax (GST) on the prices of petroleum products reined in the POL prices from the beginning of the current month.
“Otherwise, POL prices might have hiked by Rs 12 per litre,” Bajwa said while responding to pinching questions raised by the members of the National Assembly’s Standing Committee on Finance at the Parliament House.
He added that the government suffered a loss of Rs 68 billion under the head of sales tax due to reduced prices of petroleum products.
“Therefore, the government increased the ratio of GST temporarily from 22 percent to 27 percent to cover up a little bit of the loss.”
The NA committee met here with Omar Ayub Khan in the chair to discuss the imposition of 27 percent GST on petroleum products and regulatory duty on various items, including furnace oil, by the government without prior approval of the parliament.
The agenda of the meeting also included discussion on the Public Sector Development Programme (PSDP) furnished by the Finance Ministry for recommendations of the committee thereon, and to discuss the planned merger of NBP Jhang region with Faisalabad zone.
In response to queries of the committee members, Bajwa said that the government did not raise the prices of petroleum products on March 1 due to the increased ratio of GST; otherwise the prices of petroleum products could have hiked by Rs 12 per litre. He added that 37 percent GST had been levied on high-speed diesel to compete with the HSD prices in the international market.
He told the committee that reviewed revenue collection target agreed with the International Monetary Fund (IMF) was Rs 2,691 billion and the FBR would utilise its full resources to achieve this target.
He said that there was a shortfall of revenue collection due to sub judice cases; however, hopefully these cases would be settled soon and revenue collection target would be met.
The committee members were informed by the FBR chairman that regarding the levy of 27 percent GST on POL product, law allows the government to increase the GST rate.
He referred to Article 7 of the constitution in this regard, under which the state is defined to include, besides parliament, any local or other authorities, in Pakistan as are by law empowered to impose any tax or cess.
This article suggests that tax can be imposed – pursuant to the powers conferred by the parliament – by an authority other than the parliament.
The FBR chairman stated that the government had exercised its authority to increase GST on POL products under the above-mentioned article.
The committee was further informed that regulatory duty on steel products – billets bar and wire rods – has been imposed at 15 percent.
It was also informed that India had increased the prices of POL products in the country at least four times after a major decrease in the world POL prices.
