Industry

The Budget is Anomalies-Ridden Shabbir Mansha

Karachi, June 22, 2022: Mr. Shabbir Mansha, Acting President FPCCI, has expressed his profound concerns on the glaring anomalies in the federal budget 2022 – 23. “We have noticed anomalies in custom duties, regularity duties, income tax and sales tax,” he added.

Mr. Shabbir Mansha noted that a turnover tax of 1.25 percent for traders, distributors, and dealers is unbearable as profit margins are barely 2 percent in-market sales and the turnover tax will continue to discourage SMEs to be registered in sales tax.

Acting FPCCI Chief pointed out that 4.5 percent withholding tax on local sales; but, normally trade margins are between 2 – 3 percent and there is no way a business can absorb 4.5 percent withholding tax and continue to operate viably. Therefore, sellers find it more viable to buy goods at 20 percent taxes; when accounting for additional duty of 3 percent on commercial importers on top of 17 percent sales tax and delist from the sales tax.

Mr. Shabbir Mansha demanded that disparities in the rates of sales tax on raw materials at the import stage between commercial and industrial importers. He maintained that under section 8 (b) of the sales tax act 1990, input tax adjustment in excess of 90 percent of the output tax is not allowed. This condition should be withdrawn; as the same has been already extended to companies operating in various sectors. Furthermore, withholding tax on the import of raw materials should be the same for industrial and commercial importers.

Mr. Shabbir Mansha has proposed that at the stage of deregistering from the sales tax system, the condition of prior audit should be withdrawn to facilitate exit after three years; provided a company, individual or association of persons (AOP) was filling a null return for the past five years due to discontinuation of their businesses.

On the withdrawal of NIC condition through amending the section 23(I)(b), FPCCI has appreciated the government; but, maintained that the Finance Bill 2022 should categorically state that no NIC would be required for sales to non-filers. Mr. Shabbir Mansha also raised the issue of 12 percent tax under section 233(1). Additionally, freight and transportation charges under section 153(1)(b) at 3 percent should only be applied to the final tax region.

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