KARACHI: The industry experts have urged the government to cut the advance tax on imports to one percent from the existing rate of five percent because manufacturers are facing hardships in getting income tax refunds.
It is notified that manufacturers were importing raw material for their own use, subjected to collect tax at source at the rate of three percent. But later on, Federal Board of Revenue (FBR) issued Statutory Regulatory Order (SRO) 154/2013 in which the withholding rate was increased from three percent to five percent.
The law makers believed that it is creating significant cash flow impacts for manufacturers and resulting in the generation of income tax refunds.
The experts have suggested that the rate of advance tax on imports under Section 148 for manufacturers importing raw material needs to be reduced to one percent.
The experts further said that the positive measures of issuance of exemption certificate on imports by commissioners was introduced in Finance Act 2013, however, these rules need to be revisited as under the current set of rules, practically no exemptions have been granted.
It is highlighted that manufacturers, whose raw materials are imported goods, are facing cash flow problems due to abnormal delays in getting their refunds.
In fact, the problem is getting worse for companies who have huge brought forward losses, tax credits and are required to pay only minimum turnover tax. In the past, this problem was resolved by granting exemption certificates on yearly basis.
Budget proposal 2014-2015: One percent advance tax on imports recommended
