The Export Processing Zone Authority (EPZA) has accused the Karachi Electric Supply Company (KESC) of charging inadmissible withholding tax on electricity bills of some 59 units operating in Karachi Export Processing Zone (KEPZ).
According to a letter sent by EPZA to the Federal Board of Revenue (FBR) it said that KESC had deducted 10 percent withholding tax on electricity bills of some 59 garment units, which are exempted from the said levy.
The EPZA termed the said act of KESC as inexplicable, saying that the company had made the deduction of withholding tax under section 235 of Income Tax Ordinance (ITO), 2001, albeit the Authority had produced all necessary details of the investors to the KESC, which evidently show that these units are eligible for exemption of 10 per cent withholding tax. Therefore, the EPZA has now asked the tax collecting authority to take remedial measures for providing maximum facilitation to these export units.
When contacted, official sources said the EPZA, through this letter, is seeking certificate for exemption from advance tax under section 235 of the ITO, 2001. Furthermore, they said, the chief commissioners of Karachi Large Taxpayers Unit (LTU) and Karachi Regional Tax Office (RTO) were also directed to contemplate the request of EPZA in view of section 159(1)(a) of Part-IV of second schedule to the ITO, 2001, for necessary action.
They said the tax collected under this section (up to bill amount of twenty thousand rupees per month) would be considered as minimum tax on the income of a person (other than a company). The tax under this section is non-refundable unless it is in excess of the amount for which the taxpayer is chargeable under ITO, 2001 in the case of a company.