FPCCI concerned over budget anomalies

KARACHI: Shabbir Mansha, acting president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over the glaring anomalies in the Federal Budget 2022/23, a statement said on Tuesday.

“We have noticed anomalies in the Customs duty, regularity duty, income tax and sales tax,” he added.

Mansha noted that the turnover tax of 1.25 per cent for traders, distributors and dealers is unbearable, as the profit margins are barely 2 per cent in the market sales and the turnover tax will continue to discourage the Small and Medium Enterprises (SMEs) to be registered in sales tax.

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

Mansha demanded the government to remove disparities in the sales tax rates on raw materials at the import stage for commercial and industrial importers.

He maintained under section 8(b) of the Sales Tax Act 1990, the input tax adjustment in excess of 90 per cent of the output tax is not allowed. This condition should be withdrawn; as the same has already been extended to the companies operating in various sectors.

Further, withholding tax on import of raw materials should be the same for industrial and commercial importers.

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has proposed that at the stage of deregistering from the sales tax system, the condition of prior audit should be withdrawn to facilitate exit after three years; provided a company, individual or association of persons (AOPs) was filling a nil return for the last five years due to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

On the withdrawal of the computerised national identity card (CNIC) condition through amending the section 23(I)(b), the FPCCI has appreciated the government; but, maintained that the Finance Bill 2022 should categorically state that no CNIC would be required for sales to the non-filers.

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Mansha also raised the issue of 12 per cent tax under section 233(1). Additionally, freight and transportation charges under section 153(1)(b) at 3 per cent should only be applied on the final tax regime.