LAHORE: The Friends of Business and Economic Reforms (FEBR) President Kashif Anwar has said that the FBR and the PRA simultaneously have been pushing the manufacturers to submit ‘toll manufacturing sales tax’ and ‘workers welfare fund’.
He said this in a meeting here the other day.
He said that the dispute had arisen out of different interpretations of toll manufacturing and workers welfare fund by the FBR and PRA to suit their interests. For example, the FBR considers toll manufacturing a ‘goods producing activity’ and collects sales tax on goods from the manufacturers under the federal Sales Tax Act, 1990 that deals with tax on the sale, import, export, production, manufacturing and consumption of goods.
The PRA, on the other hand, classifies the same activity as a ‘service’ and has issued show-cause notices to scores of factory owners for not “withholding and paying 16 per cent provincial sales tax on toll manufacturing” despite a clarification by the FBR in January 2016 that it was not a service.
The dispute between the FBR and the PRA on ‘toll manufacturing’ isn’t the only issue adding to the cost of doing business for manufacturers, especially exporters, in Punjab. The PRA is also claiming from them a tax on the ‘foreign commission’ exporters pay outside the country and services like the insurance they buy from a company based outside Punjab.
Kashif Anwar asked both tax agencies to create harmonization to facilitate the taxpayers, besides reducing the burden of filing extra returns from them.
Moreover, the FEBR President also demanded the tax authorities extend the date for filing income tax returns for the tax year 2020 for another three months till March 2021 because of the resurgence of coronavirus, calculation errors on IRIS portal and newly launched simple return form for small manufacturers.
