Purchase & supplies of yarn: PWMA terms FBR notices to zero-rated sector 'unjustified'

Textile industry has expressed serious concern over the issuance of notices to zero-rated sector by the Federal Board of Revenue (FBR). Yousuf Yaqoob Chairman Pakistan Weaving Mills Association (PWMA) said that the FBR's show-cause notices under section 122 (9) to the zero-rated sector are unjustified and the imposition of tax on registration basis is unacceptable and illogical.
According to notices any industry registered before 2011 will have to pay one percent (1%) withholding tax on yarn purchases and supplies, while those industries registered with sales tax department after 2011 will be required to pay 4.5 percent withholding tax to FBR.
Yaqoob said that this is discrimination among the industry and illogical action by the FBR that an industry on basis of registration industries will pay higher tax. "This is a huge anomaly that FBR is penalizing the new industry and investors, which will be required to pay four times more tax just because they started their operation after 2011," he added.
He has urged FBR for clarification on issuance of hundreds of notices to the textile industry particularly weaving mills, registered after 2011. Otherwise industries will be compelled to stop the deduction of 4.5 percent withholding tax on yarn purchase/supplies, he warned.
He said in a meeting with industry representatives, Chief Commissioner Inland Revenue FBR RTO III Doctor Aamir Ali Khan Talpur has denied the issuance of notices to industry. Chief Commissioner Inland suggested that industry should share the cases with evidences and necessary documents to Inland Revenue House, Karachi for further clarification.
Chairman PWMA said that despite protest still association members are receiving such show cause and issuance these notices have created panic among industry. He asked the chairman FBR to resolve the matter on highly priority basis so the industry can work without any threat of higher tax slab.