KARACHI: The Regional Tax Office-II (RTO) Karachi has issued notices to ghee and cooking oil units for submission of certificates to avoid recovery of withholding tax on the import of edible oil under Section 148 of the Income Tax Ordinance, 2001.
As per details, under SRO 140(1)/2013 dated February 26, 2013, wherein clause (9A) of Part-II, Second Schedule of Income Tax Ordinance 2001 has been omitted. Thus, reduced rate of 3 percent on import of raw material (edible oil) imported by an industrial undertaking for its own use under section 148 is no more available. Moreover, the SRO also omits the condition of production of an exemption certificate issued by the Commissioner, a proviso earlier inserted by the Finance Act, 2012 in clause (9A). Resultantly the importers are paying Advance Income Tax under section 148(8) at 5 percent in “Minimum Mode” at import stage without any compulsion of exemption certificate.
In the past, edible oil importers would used to obtaining lower rate certificate from Commissioner concerned in line with provisos of Section 159 of the Ordinance to avail reduced rate of income tax facility. However in few cases certificate could not be obtained inadvertently.
Moreover, on imports in preceding SRO 140(1)/2013 tenure, the Collectorate of Customs Port Qasim and Karachi, being WHT (advance tax) collecting agents, had been levying and collecting Income Tax at 3 percent apparently on the strength of active NTN number of industrial concern. Resultantly no loss to national exchequer has ever been reported.
The industry feels it appropriate to suggest that need for obtaining reduced rate certificate has faded out after inception of SRO under reference however, in a case where certificate could not be obtained the need of same may be waived off or issued retrospectively. During the tenure under discussion the industrial concerns have been maintaining active NTNs, which can be easily cross checked and verified from the in-house record of commissionerate Office.
