KARACHI: Pakistan Chemists and Druggists Association (PCDA) has opposed the government move to induct of pharmaceutical sector in Section 236-G & 236-H of income tax law, under which manufacturers and distributors will collect advance tax from retailers and wholesalers on behalf of the Federal Board of Revenue (FBR).
PCDA, in a letter to Shaukat Tarin, Federal Finance Minister, has pointed out some anomalies in the federal budget 2022 and drawn attention towards the proposal of insertion of pharmaceutical in Section 236-G & 236-H of income tax law.
According to PCDA, to implement of Section 236-H, will be a heavy burden on the distributors who are covering more than 6000 Retail outlets (Pharmacies) and it is very difficult to collect date like NTN and CNIC from all outlets as without collection of NTN and CNIC, the Advance Tax collection and reporting will not be possible.
"It will be a hectic exercise to check the status of thousands of retailers as they are filer or non-filer at the time of invoicing for collection of 0.5 percent and 1 percent advance tax to justify their sales," said Salahuddin Sheikh Chairman PCDA in the letter.
He said that this exercise will also require additional staff or need more consultants for proper collection of tax.
The proposed heavy penalties will also increase the cost of business, which is already on higher side by serving pharmaceutical supplies, which requires urgencies and repeated supplies and to maintain temperature sensitivity, he mentioned.
Every manufacturer, distributor and retailer is answerable for their own taxes and this responsibility of tax collection and its lengthy reporting/monitoring is not responsibilities of manufacturer or distributors, he added.
According to PCDA, pharmaceutical sector is being regulated by DRAP under Drug Act-1976 and most of manufacturers & distributors are appearing on active taxpayers list (ATL). Due to huge turn over they are declared as withholding agents and already monitored by FBR for WHT under various sections like 153, it added.
Pharmaceutical sector's turnover is very huge and in clause 24-C & 24-D of Second Schedule it is applicable @ 0.25% Turn Over Tax on FMGC subject to condition of ATL in Sale Tax. Since the GST is not applicable on Pharmaceutical so the entire supply chain is not registered in Sale tax. and in this situation, pharma sector how will get benefit of exempted section to avail the reduced rates of 0.25 percent of Sale Tax registration condition by pharmaceutical sector, Chairman PCDA said.
Sheikh said that thus move is contrary to the policies of government of ease of doing business and will open a new avenue of corruption; therefore this proposal of insertion of these sections may be omitted in the Finance Bill in the larger interest of the industry.
Copyright Business Recorder, 2021
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