Inland Revenue conducts inquiry into misuse of SRO 1125

KARACHI: Commissioner Regional Tax Office-III, Karachi has taken notice of misuse of SRO 1125(I)/2011 by fake importers and manufacturers.

The investigation and prosecution branch of RTO-III is conducting investigation against registered persons who are involved in the misuse of SRO 1125(1)/2011. It was reported by the Assistant Commissioner-IR of the Investigation and Prosecution branch that after the change in tax structure for textile sector manufacturers and for commercial importers effective from July 2017 (specifically of finished fabric) units registered as manufacturer cum importers are misusing facility of zero rated imports of fabric under SRO 1125(1)12011 and after importing finished fabric at zero percent Sales Tax, supplies are declared to have been made to textile sector registered units to avoid payment of Sales Tax at the rate of 6.0 percent under aforesaid SRO.

Whereas in actual the imported finished fabric is sold/dumped in local markets for onward sales to end consumers, thus causing heavy loss to National Exchequer.

In a letter to Customs Appraisement East, RTO-III has requested to inform that whether the Custom is collecting post dated cheques from the importers of finished fabric at the time of clearance of goods and if cheques are collected then provide the detail of importers and amount of cheques collected in each case.

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