Demanding a uniform steel import policy, steel merchants have urged the federal government to immediately withdraw 5 percent additional custom duty and regulatory duty imposed on secondary steel imports in the FY20 Budget. During the meeting with Prime Minister at Governor House, Karachi last week, Shamoon Baqir Ali, President, Karachi Iron and Steel Merchants Association (KISMA) discussed the budget anomalies and submitted the same to the Prime Minister for consideration.
According to budget anomalies of iron and steel sector, in addition to already imposed 20 percent customs duty and 5 percent regulatory duty, the federal government in the budget FY20 has increased additional custom duty from 2 percent to 7 percent for import secondary steel The total custom duty on import of secondary steel, which is a raw material, has surged to 27 percent.
Some one percent additional custom duty on steel import was imposed in budget FY17 and later was increased to 2 percent in FY18. Now, the additional custom duty has been suddenly increased by 5 percent from 2 percent to 7 percent.
They said that increase in additional custom duty by 5 percent leaves no room for further import of secondary steel. This move may result in of closure of steel import business. KISMA has requested the federal government for immediate withdrawal of 5 percent additional custom duty to protect steel merchants.
KISMA demanded regulatory duty on steel items having HS code: 7208 (12.50 percent RD), 7209 (5 percent RD) and 7210 (5 percent) should be removed or it should be imposed the same on all importers, whether it imported by manufacturer or commercial importers.
"It is a surprise that the government has abolished zero-rating regime for five export-oriented sectors, which are considered the backbone of Pakistan's export to generate Rs 80-90 billion revenue, while on the other hand SRO. 565 & 606 still stand inflicting losses of over Rs 100 billion to the exchequer," it added.
KISMA has also highlighted the discriminatory treatment with commercial importers saying that commercial importers in any sector are paying highest duties and taxes, including 17 percent GST, 3 percent Value Added Tax (VAT)/Additional Sales Tax (AST) and some 6 percent income tax. Industries are getting some exemptions and paying annual income tax with their returns at 1.50 percent maximum.
While, discussing the CNIC requirement for trade, the association said that in an undocumented economy like Pakistan it is impossible for anyone to get CNIC from their buyers typically when 85-90 percent people are uneducated and they don't know for what reason their CNIC is being asked for and what purpose it will be used for.
This condition alone as per the Finance Act is enough to halt the country's economy as nobody will be able to sell their materials as no buyer will provide CNIC. Also, it makes no sense to put such a compulsion when all registered persons when selling to unregistered persons are paying 3 percent further tax, which is borne by the registered person itself, rather than the buyer, it added.
Taxpayers should not be further burdened with such a clause which is impossible for them to comply with, KISMA maintained.
In a letter to Prime Minister, KISMA has also highlighted the negative attitude of customs authorities. It said that steel importers are being harassed while they send consignments to their customers in different parts of the country through inland transit.
Currently, KISMA said loaded steel coils/sheets vehicles are being stopped and detained at various customs checkpoints throughout the country by customs officials. They ask for different documents and threaten to charge further duties and taxes, if they are not compensated with.
"Our members are not involved in illegal activities such as smuggling. The association also cannot at any point support such activities. The customs authorities should check and stop smuggled goods at the entry points like Chaman border, rather than stopping them at the borders or ports," it added.
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