Non-retail sales of auto-parts: Paapam urges FBR to honour commitment to withdraw two percent tax

The Pakistan Association of Automotive Parts Accessories Manufacturers (Paapam) has called upon the Federal Board of Revenue to honour its repeated assurances that it will withdraw two percent extra sales tax on non-retail sales of auto parts. Chairman Paapam, Usman Malik said here on Tuesday that FBR had not solved that issue even after lapse of almost five months since levy of that illegal tax on non-retail sales of auto-parts.
"This is another glaring example of a case of gross injustice, where the "so called" two percent extra tax on retail sales, which was levied specifically on retail prices to mop up taxes evaded by the undocumented downstream supply chain, has been wrongly applied on non-retail sales of a fully documented sector," he lamented.
Malik said FBR Chairman Tariq Bajwa had personally committed during meetings with the present and past Chairman, Vice Chairman, and other delegations of Paapam that this two percent extra tax would be withdrawn from the auto parts manufacturers, after fully agreeing that two percent extra sales tax tantamount to double taxation for this fully documented and registered sector.
However, after a lapse of almost five months since issuance of SRO 896 levying two percent extra tax, no action has been taken by FBR to reverse this anomaly. On the other hand, the field formations of FBR are issuing notices to the Auto Parts Manufacturers (APMs), both in Lahore & Karachi, to deposit this illegal levy in the government exchequer forthwith.
Malik appealed to the FBR Chairman that he should immediately resolve the problems faced by the industry so that the manufacturers can run their industries in peace, play a more effective role in the development of the country and help in stabilisation the economy. He said strengthening the economy was top priority of the government and for that purpose some hard decisions should be taken by the FBR to improve the tax collection climate.
He added the APMs were going through an extremely trying time and counting on FBR and Ministry of Finance's support to resolve their problems.
He demanded withdrawal of two percent extra sales tax on non-retail sales of APMs with instruction to the field formations of FBR to stop harassment of their members for collection of retail taxes which are not applicable to non-retail sales of the industry.
It is extremely important that two percent extra tax on auto parts should be withdrawn with retrospective effect from 4-10-13 (ie date of SRO 896(I)/2013), as this tax is also not adjustable as input tax" stated Senior Vice Chairman, Paapam, Aslam Rayaz, and added that definition of 'auto parts' should logically include batteries, tyres & tubes as these are also supplied to automotive assemblers and remain part of the documented supply chain. Therefore these items should also be exempted from two-percent extra sales tax.