The Federal Board of Revenue (FBR) has rejected a budgetary proposal of a leading Karachi-based multinational company to withdraw federal excise duty (FED) on shampoos in the upcoming budget (2012-2013). Sources told Business Recorder here on Saturday that a top multinational company has requested the FBR to abolish the FED on shampoos from next fiscal.
Pakistan Customs Tariff (PCT) heading 33.05 covers preparations for use on the hair including shampoos. The duties of excise have been used in a number of countries with the objective of curbing consumption of items such as tobacco and liquor. The other objective is usually regulating the market.
Such duties of excise are not meant for items of general public use or public welfare. However, the Government of Pakistan took departure from this general practice of tax economics and imposed federal excise duty on a number of items including "shampoos". Having realised the abnormality, the government did announce that these duties of excise shall be gradually eliminated over two years but no specific policy has been released on this front. This delay in appropriate action is causing market problems.
The multiplicity of taxes and overburdening of costs for the consumers, are main problems faced by the industry and trade. Owing to the issues framed above, it is proposed that the government should consider withdrawal of federal excise duty on "Shampoos" (HS Code 33.05) in the next fiscal budget 2012-13 in line with its clear commitment to gradually eliminate excise duties, company added. Keeping in view revenue implications of the withdrawal of the FED on shampoos, the FBR has dropped the proposal of the multinational company, sources added.