Sec 148 of IT Ordinance 2001: PBC suggests cut in withholding tax to one percent

Pakistan Business Council (PBC) has proposed reduction in withholding tax to 1 percent from 5.5 percent collected under section 148 of Income Tax Ordinance 2001.
The budget proposals of PBC strongly advocate the problems being faced by the business community. In order to reduce the cost of doing business in Pakistan, PBC suggested the authorities to revisit the present rules applicable for the issuance of exemption certificates for manufacturers. The positive measures of issuance of exemption certificate on imports by commissioners was introduced in Finance Act 2013, however these rules need to be revisited as under the current set of rules, practically no exemptions have been granted. This is causing hardships in the form of income tax refunds.
It also proposed that section 122(5A) should not be used as a replacement for section 177. As such the amendment made through the Finance Act be deleted and added that this amendment had brought the section 122 (5A) of the Ordinance parallel to section 177 read with section 214C and 122(5) of the Ordinance and attempts to negate the concept of self-assessment and lead to fishing enquiry. Unfortunately, the tax department is using section 122(5A) as norm instead of exception.
The council cited that the section 113(2)(C) of Income Tax Ordinance 2001 did not allow carry forward of losses, which the PBC termed as huge disincentive to invest in large capital intensive undertakings.
It said that SRO 895(I) & SRO 896(I) did not allow manufacturing entities to claim 2 percent extra tax as input. Therefore, it has been recommended that purchases made by registered manufacturers of the specified goods should not be subject to the extra tax or else set off should be allowed.
Furthermore, the PBC said that the authority could provide a level playing field for domestic manufacturing by imposing a cap on unexplained remittances other than the investment in industrial undertaking.
It also recommended that 2.5 percent tax credit should be allowed to manufacturers who buy at least 90 percent of input from registered suppliers and added that the authority in order to document the economy should fix the import value in consultation with the industry besides taking stiff measures to strengthen the National Tariff Commission (NTC).
PBC proposed to extend the period of tax credit given under section 65B of Income Tax Ordinance 2001 for investment from June 30, 2016 to June 30, 2019 to promote industrialisation.