KARACHI: The Federal Board of Revenue (FBR) has estimated around one billion rupees in revenue collection after the proposed re-imposition of federal excise duty on goods in the next budget, sources said on Monday.
Sources said the FBR is mulling re-imposition of federal excise duty (FED) on various goods in the forthcoming budget for 2019/20 to generate revenue. The sources said the FBR received recommendations from various tax units to restore FED on various goods, which was abolished by the previous government.
The FBR was informed that FED withdrawal was unnecessary as it didn’t encourage the industry, while cutting the revenue. The FBR received a recommendation to reintroduce FED on various goods, including cosmetics, paints and varnishes, lubricating oils, greases, bitumen, air conditioners and deep freezers.
The sources said the FBR estimated an additional amount of around one billion rupees with the re-imposition of FED on such goods through the budget 2019/20. The sources said the FBR is considering enhancement of uniform rate of FED from 16 percent to 17 percent.
The tax managers informed the FBR that the standard rate of sales tax was increased through Finance Act, 2013, but the standard rate of FED was kept unchanged. The FBR was proposed to raise the rate of FED to 17 percent for the purpose of uniformity in all cases where existing rate is 16 percent. The sources said the enhancement of FED rate would help the FBR to generate revenue.
The sources said the FBR was advised to review the existing rate of FED on import of edible oils. At present, Re1/kilogram is charged upfront on import of edible oils for manufacturing of vegetable ghee and cooking oils. The FBR was advised that the rate was fixed in 2006 and since then the local currency massively depreciated. Therefore, the rate needs to be revised upward.
Another proposal of increasing FED rates on beverages was under consideration at the FBR, the sources said. They said the rate of FED on beverages is currently at 11.5 percent while FED on concentrates used for beverages is 50 percent.
The sources said the present tax regime resulted in huge input FED of 50 percent adjustment as against output FED of 11.5 percent. Further, another major component for manufacturing of beverages is sugar on which sales tax is only eight percent. The FBR was advised to increase the rate of FED on beverages to 17 percent from 11.50 percent.
(This news/article originally appeared in The News on 16th, 2019)