Tax on agri income from next July – Business

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Wednesday said that tax on the agriculture sector would come into force from July 1, 2025, under the National Fiscal Pact (NFP) with provinces and hoped to sign a memorandum of understanding (MoU) shortly with China on talks for reprofiling of energy sector debt.

Speaking to journalists after a meeting of the Senate Standing Committee on Finance, the finance minister said that discussions with provinces over the NFP were progressing well and uniform legislation for tax on agriculture income would be introduced by January that would become effective for collection from July 1, 2025.

Responding to a question on energy debt reprofiling with China, the minister said the talks were progressing, and the two sides expected to sign an MoU soon “to continue talks”. His statement put to rest some media speculations that the two sides were ready to sign reprofiled debt agreements during the visit of Chinese Prime Minister Li Qiang to Pakistan next week.

The minister had previously stated that Pakistan had formally sought written requests for energy sector debt reprofiling given heavy capacity payments, resulting in unaffordable energy rates and piling up of circular debt. This has now required detailed talks with Chinese financial institutions and investors on a project-to-project basis to finalise revised term sheets, mainly relating to lengthening the existing front-loaded debt repayment period in 10 years.

Aurangzeb says MoU with China on talks for energy debt reprofiling shortly

In a rare appearance before a parliamentary panel, the outgoing country director of the Asian Development Bank, Yong Ye, briefed the Senate panel on Pakistan-based operations.

He informed that the Manila-based lending agency would be providing $8.4bn to Pakistan over the next four years, including $2.005bn this year, followed by $1.855bn in FY25, $2.3bn in FY26 and $2.25bn in FY27.

Action against non-filers

Meanwhile, Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial said the number of income tax returns had more than doubled to four million and there would be no extension in the last date for returns filing. He said the government would start a crackdown against non-filers next month based on a large data set.

He said the prime minister had issued strict instructions not to spare any tax thief, and a full-fledged action would bring more people into the tax net.

Panel clears banking bill

The meeting of the Senate Standing Committee on Finance presided over by Senator Saleem H. Mandviwalla passed unanimously, with certain amendments, the government bill titled “The Banking Companies (Amendment) Bill 2024,” which was referred by the House on Aug 27. The committee had recommended that the decision of the SBP management against any financial entity or its board, etc., under the fit and proper criteria after passing through the SBP board for appeal should finally be referred to the finance minister for a review as the representative of the collective political wisdom of the parliament.

However, the finance minister said such a suggestion would not align with the central bank’s autonomy and best governance structures. Some members believed that the SBP Act had provided specific clauses beyond the autonomous status and that they should be reviewed.

The finance minister suggested a broader amendment package which should look into this aspect, and he would also like to remove the restrictions on the dual nationality of top SBP executives, except in the case of the governor.

Agreeing to the suggestion for future legislation, the committee approved the bill that also seeks to allow commercial banks to set up subsidiaries for microfinance banks under their corporate social responsibility besides providing indemnity to SBP officials from actions taken in good faith in terms of resolution of banking sector’s regulatory regime.

10pc levy on Iranian vehicles

The meeting also discussed imposing a 10 per cent levy on transport and business operations between Pakistan and Iran. It was reported that when Pakistani vehicles transporting cargo from Quetta to Iran reach their destination, Iranian authorities deduct 10pc of the fare as an additional fine. In contrast, Iranian vehicles transporting goods from Quetta to Iran incur no such charges. This practice disregards the principle of reciprocity and results in unequal treatment of Pakistani vehicles.

The FBR team informed the committee that this issue had been communicated to the Ministry of Communications, the designated authority for implementing the Bilateral Road Transportation of Goods Agreement. In coordination with the Ministry of Foreign Affairs, it was recommended that the Ministry of Communications address this matter with Iranian authorities.

Published in Dawn, October 10th, 2024