KARACHI: Textile exporters have demanded Federal Board of Revenue (FBR) to allow exemption certificate for import of machinery by industrial undertaking.
In its proposals for budget 2018/2019, All Pakistan Textile Mills Association (APTMA) said that the exemption certificate U/Sec.148/159 of Income Tax Ordinance, 2001 is issued to loss declaring companies. No exemption certificate U/Sec.148 is issued to exporters.
Moreover in SRO 947(I)/2008 dated 05.09.2008 the condition (v) is not properly worded regarding payment of no tax on income.
The positive measure of issuance of exemption certificate on imports by Commissioner was introduced in Finance Act, 2013, however, these rules needs to be revisited as under the current set of rules, practically no exemptions have been granted. This is causing hardships in the form of income tax refunds.
The condition (v)(a) and (b) state that no tax is likely to be payable on income. At times officer refuse the certificate that minimum tax under section 111 is payable and the condition is not satisfied. Whereas, the condition is actually tax on income and not the minimum tax. Therefore, the language of condition (v) ought to be made explicit stating that no tax is likely to be paid other than minimum tax.
To encourage capital investment in the country exemption certificate U/Sec.148/159 for Import of Machinery by Industrial Undertaking be allowed. In the past, this problem was taken care of by granting exemption certificates on yearly basis.
Moreover for issuance of exemption certificate there is no prescribed time limit and hence the issuance is delayed inspite of consistent follow up. Most of the refunds of the industry are on account of non-issuance of exemption certificate for import of machinery / parts / raw material.
