KARACHI: The Large Taxpayers Unit (LTU) has started recovering around Rs 2 billion from the companies, which wrongly adjusted input sales tax on purchase of finished goods.
The revenue authority has issued show-cause notices to 23 large size manufacturers for availing the input adjusted on finished products. The companies were asked to explain their position till December 1.
The LTU, Karachi, after scrutinising input adjustment data of the past two years, identified that manufacturers had falsely mentioned some products as raw materials on which tax credits are granted.
The show-cause notices were issued to companies in steel, pharmaceutical, textile and other sectors. In October 2013, the FBR, through a notification, listed around 11 categories of items under the finished consumer products and prohibited any tax credit on purchase of such items.
The FBR imposed 2 percent extra tax on such products in addition to normal rate of 17 percent, bringing the total tax rate to 19 percent. These goods included electrical items, household gas appliances, foam and spring mattresses, auto parts, lubricant oils, tyres and tubes, storage batteries, arms and ammunition, paints, tiles and biscuits.
