ISLAMABAD: Federal Minister for Law and Justice Zahid Hamid has said that the government is struggling to reduce the share of indirect taxes in the overall revenue receipts.
Speaking during question hour in the Senate, the minister said federal government imposed three main indirect taxes in the country including Customs, Sales Tax and Federal Excise Duty, adding an amount of Rs 406.180 billion were collected on account of custom duty during financial year 2015-16.
He said currently the rate of indirect taxes was 60 percent against 40 percent direct taxes, adding in budget 2016-17, the share of Customs Duty in budgetary revenue measures was only Rs 11.4 billion out of total more than Rs 148 billion.
He said the rates of Customs Duty (CD) used to be very high in the past, adding in 1987-88, the maximum statutory rate of CD was 125%.
Over the years, however, he said the duty rates had been gradually reduced and in 2013-14, it was decided that the Customs Duty slabs would be reduced from 7 to 4 and the highest slab would be brought down 10 from 30% to 20% in the next three years.
Accordingly duty slabs had been reduced to four, i.e. 3%, 11%, 16% and 20% in the budget 2016-17, with the highest of 20%..
Similarly, he added, the major thrust of the policy and administrative measures initiated during FY 2014-15 and 2015-16 was on placing more reliance for revenue generation through direct taxes. He said standard rate of Sales Tax in respect of goods was 17% up to 30-06-2011, which was reduced to 16% for two years. With effect from July 1, 2013, it was again reverted to 17% which was still applicable.
He said Sales Tax on services fall within the purview of provinces except in Islamabad Capital Territory where tax rate is 16%. Standard rate of Federal Excise is 15%. However various rates ranging from 8% to 65% for specific sectors/goods have been specified in First Schedule to the Federal Excise Act, 2005.
Answering another question, he said the Federal Board of Revenue had issued Inland Revenue Reward Rules, 2016 which includes whistleblower, adding so for only one report or information had been filed by an informer.
As part of such efforts, the minister said the government had drafted Public Interest Disclosure Act which would be presented to the both house of the Parliament soon.
