The Federal Board of Revenue (FBR) is considering a major budget proposal of textile sector for Finance Bill 2018-19 about charging a uniform rate of one percent withholding tax on imports made by commercial importers and manufacturers under SRO 1125(I)2011 and referred the proposal to Ministry of Textile Industries for comments.
Sources told Business Recorder here on Saturday that the FBR has submitted a set of budget proposals of Pakistan Yarn Merchant Association (PYMA) to the Ministry of Textile Industries for finalization before budget 2018-19. In this connection, the FBR Customs Budget Wing and Ministry of Textile Industries are coordinating to finalize customs and import related budget proposals for 2018-19.
The FBR has referred the following proposals of the PYMA to the Ministry of Textile Industries for comments: Under SRO 1125(I)2011, commercial importers are subject to 3 percent withholding income tax whereas manufacturers are only subject to one percent withholding income tax. Prior to SRO 1125(I)2011 and SRO 1125(I)2011 and SRO-212(1) 2013 withholding tax was being charged at a uniform rate of 1 percent for more than five years.
Currently duty is 12 percent and the last increase of 1 percent in 2016 was imposed without consulting stakeholders. It was applied due to Abbottabad earthquake in 2015 vide SRO 1178(1) 2015. Since, recessions of Abbottabad had been recovered by 2016 but still this tax is being charged. Therefore this decision is unfair and must be withdrawn.
The discrimination between manufacturers & commercial importers has allowed fraudulent elements to take undue advantage and thus depriving the government of its share of revenue. Therefore, it has been strongly recommend that withholding tax should be same for all commercial importers and industrial importers at import stage. A level playing field must be provided to both commercial importers and manufacturers and there should be no difference in the taxes being charged which will enable the industry to grow and will result in higher employment and revenues for the government.
The weavers can compete in international markets and common people will be provided fabric in the local market at competitive prices. Local textile industry will be stimulated and more jobs will be created in the industry.
Fake importers under the umbrella of manufacturing units will be reduced and commercial importers will be enhanced so the government will earn higher revenue. The industry has also proposed withdrawal of 5 percent regulatory duty on the import of polyester under Chapter 54 of the Pakistan Customs Tariff (PCT).