PSMA urges FBR to reduce turnover tax

Pakistan Steel Melters Association (PSMA) has proposed the Federal Board of Revenue (FBR) to reduce turnover tax from existing one percent to 0.2 percent in the coming budget (2012-2013) in view of low profits of the industry. Sources said that PSMA in its budget proposals for 2012-13, suggested the FBR that the Board had compensated certain industries with high turnover and low profits from one percent to 0.2 percent turnover tax.
The industries can be named as flour mills, SNGPL, SSGPL, POL products refineries and rice units. The PSMA stated that Steel Melting Furnace industry also fell in the above category with involvement of heavy finances, high turnover but low profits. It is apprehended that non-documented sector is likely to benefit while steel melting industry is being heavily over burdened. In order to balance it, the industry suggested that on Association of Persons (AOP), individual limited or proprietorship companies the turnover tax be reduced from one percent to 0.2 percent.
It was further suggested that income tax should be collected on monthly electricity bills as final discharge of tax liability and exempt from payment of all prevailing withholding taxes. There are two types of steel industries including steel melting units. In case of Composite Units, it covers a unit having facility of both, steel melting and steel re-rolling with one electric connection. The suggested rates of final tax on electric bills included Steel Melting Units Re 0.62 per unit of electricity consumed and Composite Units Re 0.75 per unit of electricity consumed.
This would help increase revenue collection of the government. Exemption certificate will also be done away with and the tax would easily be collected from those units which are not following special procedure. The industry has further proposed that exemption should be granted from payment of income tax at one percent on turnover under section 113 of the Income Tax Ordinance, 2001, and exemption from payment of withholding tax either at one percent or at 3.5 percent on supplies/purchases under section 153 of the income tax Ordinance 2001.
Moreover, exemption has been granted from payment of income tax on import of raw material ie scrap, Ferro alloys, Manganese, re-factories, nozzles, copper moldings, slide gats, porous plugs and other chemicals etc, under section 148 of the Income Tax Ordinance, 2001. The industry has further sought exemption from five percent WHT on electric bills received by the units of the concerned industry.