The NTC is asking provinces to pass agriculture tax bills by the end of the year

• The terms of reference of the NTC will be extended to include real estate tax.
• Single rates on cards to harmonize VAT for goods, services.
• Considered amendments to AIT regimes to align them with Federal Persona.
  

ISLAMABAD: The National Tax Council (NTC) has decided to table amendments to the Agriculture Income Tax (AIT) legislation in the provincial assemblies after failing to reach an agreement on the harmonization of Goods and Services Tax (GST) rates as well as consolidation of property taxes a single regime.

The NTC intends to present a draft GST negative list on services by January 1, 2025.

Although the Federal Board of Revenue (FBR) considered it a big success after implementing consolidated GST returns for mobile operators (CMOs), their input adjustments were still facing problems. The unified GST return format for the entire telecom sector is still very difficult.

However, on the AIT legislation, the Finance Ministry maintained that the International Monetary Fund (IMF) had so far not raised any question on Punjab’s AIT legislation, where no specific rate had been incorporated in the amended AIT Act.

Sindh took the position that the Sindh Revenue Board (SRB) has prepared the draft amendment bill and it will be a political decision to present it before the cabinet and table it before the provincial assembly.

Khyber Pakhtunkhwa and Balochistan have also committed to introduce it in the assemblies by the deadline of January 1, 2025. Regarding the harmonization of GST on goods and services, it has been decided that the uniform rates will be introduced, so the NTC executive committee will decide further to finalize its details.

In the negative list for GST on services, it will be changed from positive to negative list and will be implemented from July 1, 2025. However, the first draft will be presented before the NTC by January 2025.

The FBR and the provinces had sharp differences over the finalization of the negative list of GST on services because the view persisted in the FBR that there would be many areas where the provinces could encroach on the Centre’s domain by replacing the positive list with the negative list.

Contacted KP Finance Minister KP Muzzammil Aslam said it was the first meeting of NTC after almost 18 months, promising to hold meetings frequently, at least one meeting every quarter.

The sources said the meeting discussed amending the Agricultural Income Tax (AIT) regimes to bring them fully in line, through necessary legislative changes, with the Federal Persona from January 1, 2025, with collection for the second half of FY 2024- 25 in July. 2025.

It also seeks to shift GST services from a positive list to a negative list approach to combat tax evasion with effect from the beginning of FY2025-26, with the aim of collectively increasing revenue from corporate tax on agriculture and GST on services combined with a provincial tax effort to expand additional areas of revenue collection, develop, implement and collect revenue under a common approach to property taxation, implement reforms to reduce tax compliance gap including GST.

The terms of reference of the NTC will be expanded to include property tax and the necessary legal and administrative changes to implement them.

According to an official statement issued by the Federal Ministry of Finance on Wednesday, a meeting of the NTC was held at the Finance Department under the chairmanship of the Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb.

The meeting brought together key federal and provincial stakeholders to discuss critical issues related to tax reforms and harmonization. The meeting was held in the context of the recently signed National Fiscal Compact between the Federation and the provinces, stressing the need to tap the full fiscal potential from the under-taxed sectors, especially real estate, real estate and agricultural income.

The meeting was attended by Finance and Revenue Minister Ali Parvez Malik, Punjab Finance Minister Mian Mujtaba Shuja-ur-Rehman, KP Finance Minister KP Aslam, Balochistan Finance Minister Mir Shoib Nausherwani, Chairman FBR, Chairman of District Councils Revenue and the federal and provincial finance secretaries.

In addition, experts from the World Bank and other senior officials from the Finance Directorate and provincial finance departments were present.

The NTC emphasized the importance of coherent policy implementation, capacity building and strong stakeholder engagement to achieve sustainable reform goals. The Minister of Finance reiterated the government’s commitment to promote cooperation between all stakeholders for a unified and efficient tax framework.

Originally published on The News