The Federal Board of Revenue has decided to reduce five years time period for maintenance of tax records to one year for cotton ginners. Sources told Business Recorder here on Tuesday that the FBR has fulfilled a major demand of the cotton ginners by reducing the period of maintenance of tax record from 5 to one year. This would simplify maintenance of the documentation by the cotton ginners, who are engaged in seasonal business on annual basis.
However, the FBR will not reduce the rate of 3.5 percent withholding tax on cotton ginners. In this regard, the FBR will also issue a clarificatary letter to the concerned association to clarify issues pertaining to cotton ginners. The relevant notification will be issued here on Wednesday (today). The notification has been vetted by the Law and Justine Division, but it was not issued on Tuesday to resolve all issues of the cotton ginners. In this connection, the time period for maintenance of tax record has been reduced from 5 to one year for cotton ginners.
The FBR has also decided that the compulsory provision for making payment through banking channel would not be applicable on growers. When cotton ginners will purchase raw cotton from the growers, they would not be subjected to 3.5 percent withholding tax. Around 90 percent of the industry covers commission agents. If the ginner would make purchases of cotton from commission agent, it would be subjected to deduction of 10 percent of the commission, sources added.
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