LAHORE – Pakistan Chemicals and Dyes Merchants Association on Thursday called for immediate rectification of anomalies in the Federal Budget 2021-22 in due consultation with the PCDMA and other major trade bodies of the country.
Addressing a meeting, Ex Vice Chairman of PCDMA Arshad Usman said that the budget would discourage economic growth if the anomalies are not rectified. President of Punjab Dyes & Chemicals Merchants Association (Lahore Chapter) and Ex Senior Vice President of the Lahore Chamber of Commerce & Industry Khawaja Khawar Rashid and the stakeholders also expressed their views.
Ex Chairman PCDMA said that one sector that is being ignored in this budget is the industrial raw material importers. This sector is not getting any finance from the bank. He said that rather they finance the industry and supply raw material to the industry on an easy payment basis and help in solving the financial crunch.
He said that they import raw material and help in export and domestic industrial growth, unlike the import of finished products which is burden on foreign exchange.
Arshad Usman stated that SMEs, as defines only MANUFACTURERS in clause 59A, may also add in industrial raw material importers. He said that there should be parameters for 3-4% audit selection by the board. The existing audit notices may be withdrawn to make the selection of audit as per parameters.
He said that placement of invoices in FCL is unpractical and is beyond the jurisdiction of any customs act as shippers in a foreign country does not come under their jurisdictions. This has also clarified by FTO in the past. For example, If the importer mention placement of invoice n PL in LC or Bank contract, his compliance is done, but the shipper abroad does not comply we cannot force them to do so.
Ex Chairman PCDMA there are so many exercises (like SINGLE WINDOW AND EDT) to avert misdeclaration and we stand against under-invoicing. Further for raw materials, the duty structure is on the lower side as such custom revenue impact is not much, plus numerous raw materials are covered by Valuation Ruling at a higher value than import price so the invoice does not have any revenue impact.
He said that CNIC mandatory for unregistered sales has not helped in broadening the tax base, rather has intensified malpractices. If CNIC conditions are relaxed for sale up to RS.1L, the sales tax revenue will be increased along with the 3% extra ST.
He said since all imports are subject to value addition, the condition of value addition as mentioned in SRO1190(I)/2019R/W 647(I)2007 for commercial importers may be deleted as it is immaterial and causing hardship.
IT UNDER SEC 148 12th schedule part II: This list is incomplete even after the lapse of so much time. The items of SRO 1125 that is well scrutinised may be added in this as the manufacturers are also getting the same benefits.
He said that the scope of WITHHOLDING TAX is being reduced which is much appreciated. On the contrary, we see that more sectors are being added in Sec 236G and SEC 236H. It is suggested that sec 236H n 236H may also be withdrawn altogether. Very interestingly the seller of goods is to fetch WT from buyers is very unnatural.
Ex Chairman PCDMA added that importers who paid the highest slab of tax as advance tax previously under FTR has been placed last year very unjustifiably under MTR. This is very harsh and unrealistic. It is suggested that NORMAL TAX REGIME NTR be replaced with audit immunity as the highest percent advance tax is being paid by them.
He said that Sec 203A empowers criminal proceedings to businessmen based on suspicion is quite harsh. This is nothing but increasing harassment and hindering the conducive business environment. Suggest deleting sec 203A altogether.
He said that W.T. on local supplies @4.5% increased last year from 1% due to these are raw material as defined in SRO. 1125(I)/2011. He suggested restoration of 1% as the profit margin is only 1% to 3%. Sec 147 asks for quarterly advance payment may be withdrawn for raw materials.
In case of an appeal against any order passed. The aggrieved party has to pay 100% of the disputed amount. This is very harsh and it is against natural justice.
President of Punjab Dyes & Chemicals Merchants Association (Lahore Chapter) and Ex Senior Vice President of the Lahore Chamber of Commerce & Industry Khawaja Khawar Rashid said that rectification of budget anomalies should be carried out immediately otherwise it would be hard for the tax collectors to meet their revenue targets.