Pakistan Footwear Manufacturers Association (PFMA) has recommended that the government should allow zero-rated duty on import of all the footwear raw materials, including the finished ones in order to prepare the manufacturing sector face the duty-free regime.
In its budget proposals for the year 2006-07, the association also suggested that time for adjustment of input tax be extended to one year. This is because in case of delay in receipt of bills from suppliers, input tax cannot be adjusted against next months tax liability and one has to apply for refund of such amount, which is a very time-consuming and costly process.
The association proposed that sales tax paid on purchase of generators, building materials and stationary items should also be allowed as input tax adjustment.
The association suggested that credit/adjustment of input tax should be allowed within the relevant tax period and in the immediately following tax period irrespective of the closing dates. Adjustment of refunds etc should be allowed towards tax liabilities, it proposed.
The association noted that at present there were a large number of suppliers, vendors who supply the goods with sales tax invoices but then do not pay sales tax and thereafter exporters are harassed for refund for no fault of theirs.
PFMA recommended that exporters who pay sales tax should not go through the vendors/ suppliers from whom they purchase goods in order to ensure that sales tax money is paid. They should be allowed to deposit sales tax of their vendors/ suppliers direct to the sales tax department or any designated bank and issue certificates to their vendors. This money should be paid back to the exporters within 72 hours. A system for refund should be devised in consultation with the concerned trade associations.
The association suggested that audit of the current year must be carried out within next 12 months. The penal clauses for cases detected after one year should not included in additional tax. The additional tax should also not be levied if the mistake is not detected during the annual audit.
The association noted that multiplicity of audits is causing undue workload and harassment, and suggested that only one-audit in a year be conducted.
The registered person be allowed to submit revised sales tax returns for the period he finds an omission in sales, carryover or input.
The association noted that Income Tax Ordinance 2001 contains procedural difficulties for the assessees, which need to be removed.
The association suggested that only one time notice be issued to the assessees instead of making queries on a continuous basis, which results in inconvenience.
The association recommended that the income tax laws and procedures should be further simplified to make the self-assessment schemes successful. The detailed scrutiny under this scheme is unjustified, particularly when the taxpayers have already been assessed during the survey conducted by the government.
PFMA proposed that withholding tax on imports and supplies be reduced from industrial undertakings registered with sales tax and income tax departments. The association proposed that deduction of withholding tax on utility bills should be abolished.
It recommended that appellate authorities should be placed under the ministry of law and justice so that they should decide tax appeals without any influence. There must be a time limit to dispose of appeals and more appellate authorities should be appointed to expedite the process.
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