KARACHI: Textile industry has urged the Federal Board of Revenue (FBR) to allow some tax credits/incentives or waiver of default surcharge/penalties especially in respect of raw material/manufacturing goods.
The textile industry in its budget proposals 2017-18 said that monitoring of withholding taxes should be viewed leniently as they are doing the job of tax machinery for no cost and at the same time there is existing a non-cooperative attitude as no one is willing to pay tax and if someone insist, there is a common answer that recipient asks for net of tax quote/fee/price which effectively increases the cost of business for the payer and later tax authorities despite having the knowledge of all these difficulties intends to raise demands along with default surcharge.
The industry further said that currently a proviso which restricts bank attachment if at least 25 percent of the impugned demand has been deposited even at the level of first appeal. Generally inflated unsustainable demand is raised and 25 percent of which quite high.
It is therefore proposed that condition of deposit of such amount should be removed or be substituted with five percent of impugned demand. Besides, such deposit may only be restricted at the level of second appeal i.e. Tribunal.
Government through Finance Act 2013 has raised the rate of Minimum Turnover Tax under Section 113 of the Income Tax Ordinance 2001 to 1 percent from 0.25 percent. It is recommended that the Minimum Turnover Tax be revert to 0.25 percent. This will help the taxpayers to better manage their cash liquidity.
FBR tax regime is retrogressive for corporate sector and as a result businessman prefer to conduct business as AOP or individual proprietors. The normal rate of tax impose on the taxable income of a company other than a banking company is 31 percent for Tax Year 2015 and no further reduction is intended in subsequent year. Whereas the five sectors are predominantly export sectors wherein even local sales are assessable under final tax regime wherein the rates have not been reduced. It is suggested that the Corporate Tax Rate be reduced to 25 percent as the present rate is too high. Being export sector the tax rate should be reasonably competitive.
Under the Income Tax Ordinance, 2001 here are dozens of transactions on which tax collected /deducted is final discharge of liability and over the years it has assumed the character of indirect tax. As per other countries the presumptive tax regime should be limited to dividends and bank profit only and all other transactions on which tax at source is collected or deducted should be under normal regime with no stipulation that the tax deducted/collected would be the minimum tax.
