The government has proposed the imposition of an increased rate of 17 percent GST on all taxable goods with retrospective effect from June 13, 2013 through the Finance Bill that is expected to be approved by parliament on Thursday.
Official sources in the FBR told local media on Tuesday that the Supreme Court had granted permission in its verdict to impose the increased GST with retrospective effect but only with the approval of parliament.
“Now the government has incorporated into the Finance Bill 2013 that the increased GST rate of 17 percent will be charged with retrospective effect from June 13, 2013,” added the sources.
FBR spokesperson Riffat Shaheen Qazi said they did not know in what shape the parliamentarians would approve the budget 2013-14. When asked about the requirement of assent of the president for implementing the approved budget, she said the budget was expected to be approved by parliament on Thursday and then it required the assent of the president which might take one more day.
Talking to reporters, the Chairman FBR, Ansar Javed, said he had directed the board’s members to rush to Karachi and explain to all stakeholders that the FBR would charge 16 percent GST until parliament approved the budget in order to implement the order of the apex court in its letter and spirit.
Sources said the FBR was in the grip of panic over the delay in the passage of the Finance Bill as manufacturers and importers had decided to hold up clearance of imports and sale of manufactured goods, resulting in massive revenue shortfall in achieving the revised tax target of Rs2,007 billion.
The expected revenue shortfall in the range of Rs40 billion to Rs78 billion, depending on different assumptions, will have a far-reaching impact on the ambitious fiscal framework envisaged by the PML-N government on the basis of which Islamabad’s economic team is negotiating the fresh bailout package of $4-5 billion with the visiting IMF’s mission.
“The FBR’s revenue shortfall will further push up the revised budget deficit beyond 8.8 percent of the GDP that might touch 9 percent by June 30, 2013,” said the official sources. The FBR has collected Rs1,842 billion till June 25, 2013 and the tax machinery will have to collect Rs165 billion till June 30 to achieve the desired tax target of Rs2,007 billion.