IMF calls for 18% GST on medicines, petroleum, others
The IMF estimated that rationalizing GST rates could generate 1.3 percent of GDP revenue, which equates to Rs1,300 billion in national exchequer.
Islamabad: The International Monetary Fund (IMF) has demanded the government of Pakistan to implement 18% General Sales Tax (GST) on various items including food, medicine, petroleum products and stationery.
According to details, the IMF has recommended the Federal Bureau of Revenue (FBR) to bring several dozen items under the standard rate of 18% GST, including unprocessed food, stationery, medicine, POL products and others included.
The IMF estimated that rationalizing GST rates could generate 1.3 percent of Gross Domestic Product (GDP) revenue, which equates to Rs1,300 billion in national exchequer.
However, the IMF did not estimate how much the inflation-affected public would suffer in the coming months and years if such a drastic measure of GST was implemented through indirect tax hikes.
The IMF recommendations highlighted abolition of Fifth Schedule, abolition of Sixth Schedule exemptions and abolition of reduced rate of tax under Eighth Schedule of sales tax.
IMF has decided to end zero-rating of all goods except export goods under the Fifth Schedule, limit the exemption to the supply of residential property (other than first sale) under the Sixth Schedule and it demanded that all other goods be brought to standard GST rate.
It will also tax fuel in line with the average of comparators in the region and emerging economies, media report said, citing an IMF report.
The IMF has also called for the removal of reduced rates under the Eighth Schedule and bringing all goods to standard GST rates, except for essential items such as food items, and essential education and health items which will be taxed at a single reduced rate of 10 percent.
Overall, the IMF has called for the removal of all distortionary tax policy changes related to compliance, including the abolition of minimum taxes and additional taxes, as well as the abolition of the Ninth and Tenth Schedules.
On integration of GST, it is recommended to remove all zero-ratings under fifth schedule except exports, bring all other items to standard rate of GST which is currently 18%.
Zero rating under the Fifth Schedule is available for grant to diplomats, diplomatic missions, privileged persons and privileged institutions which are governed by various Acts, Orders, Rules, Regulations and Agreements which are approved by the Parliament or issued by the Government of Pakistan etc.
Supplies made to exporters under the Duty and Tax Remission Rules, 2001 are subject to compliance with the procedures, restrictions and conditions specified therein. Except for vehicles falling under 87.02 of the Pakistan Customs Tariff, Gwadar Special Economic Zone. Imports or supplies made are subject to the same conditions, limitations and restrictions as 765[Board].
One of the First Schedule to the Foreign Investment (Promotion and Protection) Act, 2022 may impose a levy on imports or supplies for or through any qualified investment specified in serial number one of the First Schedule to the said Act for such period as specified in the Second Schedule to the said Act.
Supply of raw materials, components and equipment for further manufacture of goods in Gwadar Free Zone and export thereof, provided that in case of supply in tariff area of Pakistan, importing manufacturers in Gwadar Free Zone, locally manufactured plant and ror the supply of machinery of the following specifications, tax will be charged on the value charged on the goods declaration.
If the machinery is brought into the tariff area of Pakistan outside the Gwadar Free Zone, sales tax will be levied on the value charged on the goods declaration for importation.
The IMF has recommended that the exemption under the Sixth Schedule be restricted to supply of residential property only (other than first sale) and all other supplies should be brought to the standard rate of GST.
Sixth Schedule includes edible vegetables (imported from Afghanistan), pulses imported from Afghanistan other than apples, fruits, chilies, ginger, turmeric, rice, wheat, wheat and masun flour, Holy Quran, in whole or in parts, with translation. or without; Quranic verses recorded on any analog or digital media; Other sacred books, newsprint and books but excluding brochures, booklets and directories, currency notes, bank notes, shares, stocks and bonds, monetary gold, empty non-toxic bags for infusion solutions, dextrose and saline infusion sets, prosthetic body parts, intraocular lenses and glucose testing equipment, import of household goods and personal effects including vehicles and goods for donation to projects based in Pakistan imported by any of the Gulf rulers etc.
Commodities in the Eighth Schedule of STC include natural gas, phosphoric acid if imported by way of fertilizers and many others.
Six terrorists killed, 16 security personnel martyred in South Waziristan face-off
- 2 hours ago
Pakistan terms US official’s alleged perception over its missile capabilities as unfounded
- 21 hours ago
Sigourney Weaver makes West End debut in ‘The Tempest’
- 17 hours ago
Green Shirts face South Africa in third ODI today
- an hour ago
PM Shehbaz constitutes negotiation committee for talks with PTI
- an hour ago
PM orders strict action against tax defaulters, pushes for FBR digitisation
- 20 hours ago