ISLAMABAD: Federal Board of Revenue (FBR) Chairman Nisar Muhammad Khan has assured the National Assembly Standing Committee on Finance and Revenue to deliberate recommendations regarding differential income tax rates between industrial and commercial importers.
While briefing the committee here on the said matter, Chairman Nisar Mohammad urged the committee to prepare recommendations to bridge the higher difference of income tax rates for both categories of importers and said that the recommendations would be taken into consideration in the budget preparation phase for the next year’s budget.
He said that income tax was levied at the rate of 6 percent for commercial importers and 5.5 percent for industrial importers on the import of raw material in the country under different laws. However, export oriented import of raw material has been exempted from tax and duty.
In a written document presented before the committee and available with Customs Today, Chairman FBR said that advance tax at import state was collected under section 148 of income tax ordinance 2001 at the rate specified in part-II of the first schedule to the ordinance.
There is a differential in tax rates of commercial and industrial importers. However, the differential is not limited to tax rates but encompasses the entire taxation regime including payment of advance tax eligibility for presumptive taxation, return forms etc reflecting the differences in nature of the two trades. Commercial and industrial importers fall under different schemes of assessment of income tax. Commercial importees area assessed under presumptive tax regime. Therefore they are not required to pay any tax in addition to income tax deducted at source at the time of imports.
On the other hand, industrial importers have to pay tax on the basis of their income determined at the end of the year, which may range up to 32% to 36% of income. The industrial importers are not importing good without paying due taxes. They are subject to several restrictions, conditions, not applicable to commercial importers in order to assure that thy pay due taxes to government.
