KARACHI: The business community has advocated the government to revamp withholding tax rates on import of raw material and capital goods, which should be reduced to one percent from five percent.
It is also recommended that the commissioner may issue an exemption certificate to a sales tax registered manufacturer who is liable to pay advance tax u/s 147 and falls under jurisdiction of Large Taxpayer Unit (LTU), against import of raw materials for their own use and plant and machinery, for half yearly or annually, as per the provisions already available in the law.
It is highlighted that lower withholding tax rate and issuance of the tax exemption certificate would strongly support the industrialization base as against commercial importers.
In the previous year, withholding tax on all imports has been increased to five percent which is creating significant cash flow impact for imports of raw material used for manufacturing.
It said that the tax is adjustable for the manufacturers, in most of the cases current rate of withholding tax results in generation of income tax refunds only.
The positive measure of issuance of exemption certificate on imports by commissioners was introduced in Finance Act 2013, however, very stringently rules were made, which are difficult to comply, thereby providing no relief to a genuine taxpayer facing hardships of income tax refunds.
The business community also demanded that all registered companies in LTU should be exempted from withholding tax under Section 153 or to make quarterly advance tax payments.
It said that the penal liability in case of shortfall, in advance tax will be reduced and quarterly deposit of withholding will reduce the incidence of assesses in default.
It would save substantial amount of cost and effort involved in collecting and keeping records of evidence.