Dr Arshad A Vohra, Chairman, Naseem Anwar, Senior Vice Chairman, Dr Qazi Ahmed Kamal, Vice Chairman and Ali Ahmed, Chairman, GST, Excise and Direct Taxes Sub-Committee, SITE Association of Industry, in a press statement have lamented Federal Board of Revenue (FBR) for arbitrarily and exorbitantly increasing the withholding tax (WHT) deduction rate from 1 percent to 1/5th (20 percent) of the sales tax involved vide SRO 98(I) 2013 dated February 14, 2013 and urged to immediately rescind it as it would adversely affect the business activities in organised/documented sector.
They elaborated that in addition to LTU taxpayers now all the companies as defined in Income Tax Ordinance 2001 and registered in Income Tax, Sales Tax or Federal Excise Laws and persons registered as exporters in Sales Tax are required to withheld tax @1/5th or 20 percent of the amount of Sales Tax shown in invoice issued by a registered persons, which comes to 3.2 percent based on 16 percent standard rate of Sales tax.
Referring to commercial importers who pay advance value added tax at import stage, they said that they might not be in a position to absorb such additional amount of input tax arrived in shape of withholding and thus accumulation of tax credit would lead to accrual of refund and open the flood gate of corruption.-PR
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