KARACHI: The auto industry has demanded the same treatment which the government is giving to motorcycle dealers, distributors of FMCG, pharmaceuticals, fertilizers, and oil products, with regards to turnover tax.
The government should reduce turnover tax from 1 percent to 0.2 percent on the turnover of authorized dealers of vehicle manufacturers in the same manner this relaxation is allowed to the above mentioned sectors under part-III to second schedule to Income Tax Ordinance, 2001.
Similarly, another facility allowed to these sectors is with regard to the withholding tax at 3.5 percent under section 153 which should also be allowed on sale to the authorized dealers of vehicle manufacturers.
The benefit of both the proposed reductions is that wholesale-retail mechanism (may be implemented, as applicable internationally) will improve volumes on account of stock availability and healthy competition, while income of dealers will be subject to normal taxation that will enhance documentation and may increase tax to income ratio, the source argued.
Further, withholding income tax under section 231-B shall also be collected at the time of registration on new and used imported motor vehicles. ‘It will broaden tax net and increase government’s revenue. This will also provide a level-playing field to local automotive industry against imported new or used vehicles,’ added the source.
