War affected areas of NWFP: Rs two billion tax relief package under consideration

The government is planning to announce a lucrative tax relief package of approximately Rs 2 billion to provide exemption of duties and taxes to local businessmen and traders in the war-affected areas of NWFP province. It is learnt here on Wednesday that the Ministry of Finance has received a detailed working paper of the Federal Board of Revenue on the tax relief measures for war-affected areas.
The government would not suffer any major revenue loss by providing tax concessions and incentives to the business and trade in those areas, according to sources. Prime Minister Syed Yusuf Raza Gillani is expected to announce the package shortly after nod from all the relevant forums.
According to sources, the government is finalising this tax relief package in view of presentations made by the Sarhad Chamber of Commerce and Industry (SCCI) and other businessmen and traders of the NWFP, who suffered huge losses due to ongoing war against terror and frequent suicide attacks.
Under the proposed tax relief package, the government would divide war-affected areas into three categories. Firstly, the most affected areas would cover Federally Administered Tribal Areas (FATA), Provincially Administered Tribal Areas (PATA) and Swat. Secondly, the partially affected areas would cover Peshawar, Dera Ismail Khan, Kohat and other areas. Thirdly, least affected areas would cover Hattar, Abbottabad, Bannu and other adjacent areas.
Sources said the government may allow 100 percent exemption to the first category of highly war-affected areas in the NWFP province. This would include exemption of customs duty on the import of raw materials and inputs by the local industries in the war-affected areas. The government may also allow the cosmetics industry of Swat to pay duties and taxes in easy instalments under the tax relief package. Some ghee units located in the tribal areas may get some tax relief.
Fifty percent concessions in duties and taxes may be granted to the industries and manufacturers located in the partially affected areas of Peshawar, Dera Ismail Khan and Kohat, etc. The tax relief package may also include some concessions in sales tax and federal excise duty on cigarette industry and other categories of local manufacturers located in such areas. There would be minimum concessions in duties and taxes for the least-affected areas such as Hattar, Abbottabad, Bannu and Mardan, etc, sources added.