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KARACHI, July 4: The budget 2003-04 budget contains over 87 irritants/anomalies in which 40 relate to customs duty, 26 to income tax and 21 relate to sales tax, says a memorandum prepared by the Federation of Pakistan Chambers Commerce and Industry.
“This is a final memorandum and will be submitted to the finance minister and the anomaly committee headed by the finance secretary on July 7,” FPCCI acting president Sheikh Maqbool Ahmed told Dawn on Friday. The last date of sending report on anomalies to the government is July 10.
He said the meeting of the government’s anomaly committee was expected to be held in the current month to review the complaints of the local industry.
The FPCCI has received the proposals from foreign multinationals companies, Karachi Chamber of Commerce and Industry and upcountry’s trade bodies. Many companies have pointed out irritants in the budget on individual basis. The MNCs have urged the government to provide sufficient cushion between raw materials and finished goods so that the local industry could compete. Cut in duty on raw materials will help in reducing the cost of production.
Some of the irritants/anomalies relating to customs duty, income tax and sales tax, contain in the memorandum, are as under:
CUSTOMS DUTY: Siemens Pakistan has called for reduction in customs duty on diesel engines to 20 per cent from 25 per cent. The rate of customs duty on alternators is 20 per cent, whereas duty on diesel engines is 25 per cent. The duty on diesel generating set is also 25 per cent. Siemens says this is a clear anomaly.
Colgate Palmolive has demanded cut in duty on mixed alkyl benzene by at least five per cent as it is a raw material for making sulphonic acid. Rate of duty on both mixed alkyl benzene and sulphonic acid are 10 per cent and it is an anomaly. The company also called for cut in duty on raw materials like sodium poly acrylate, sodium sulphate, fragrance, pigments and dyes, tinopal Cbs-X and Unisan E-70, currently 20 per cent, which are used in making detergents. Customs duty on import of detergents is 25 per cent. There is only five per cent cushion. Cut in duty on raw materials will reduce cost of local manufacturing of detergents.
KCCI has urged the government to reduce duty on used computer monitors by at least 15 per cent as it was increased to 25 per cent from five per cent in the budget 2003-04. Duty on caustic soda, a basic raw material for many industries, should be cut by at least 10 per cent to reduce the cost of production. Import duty on all cars should be cut by 50 per cent to provide benefit to middle income people. Duty on bikes should be brought down by 60 per cent as the local assemblers have failed to provide bikes at cheaper rates. The KCCI has suggested for rationalization of duty on all types of machinery.
Pakistan Dyestuffs Manufacturers has called for cut in raw materials for dyestuffs to zero per cent from 10 per cent as duty on finished dyestuffs is 20 per cent.
The Pakistan Leather Garments Manufacturers and Exporters Association has said that the duty on shearling skin be fixed at zero per cent like other finished leather to facilitate exporters. The Artificial Leather and PVC Sheets Manufacturers Association said PVC Resin Emulsion and Micro Suspension Grade and artificial leather were imported at 25 per cent rate of duty. The government had reduced the duty on these items in 2001- 02, not produced locally. In 2002-03, the notification was withdrawn. Since both the items are imported under same code, therefore there is a confusion. To rectify anomaly, a separate code be allocated to import PVC Resin Emulsion and Micro Suspension Grade.
Adamjee Engineering has pointed out that the government has cut the import duty on iron powder to five from 10 per cent, whereas the duty on bronze powder remains same. Duty on bronze powder should also be reduced to five per cent because there is not a single manufacturer of bronze powder.
The Gujranwala Chamber of Commerce and Industry said that BCF Nylon Yarn, BCF Polypropylene Textured and other raw materials used for making tufted carpets, imported at 25 per cent duty, while duty on import of finished tufted carpet is 25 per cent. There is a need to provide sufficient cushion so that local industry could survive.
The Sarhad Chamber of Commerce and Industry has called for cut in duty on raw materials (polyester film and epoxy resin used in making of metallic powder) to five per cent as the duty rate on above raw materials range between 10-25 per cent, while duty on finished product is 10 per cent.
The Pakistan Vanaspati Manufacturers Association (PVMA) has demanded cut in duty on RBD palm oil by at least Rs1,000 per ton. The government had cut the duty on crude palm oil. There should be a level-playing field. Waris Sharif Industries has urged the government to provide at least 10 per cent cushion between raw materials and finished goods.
SALES TAX: The Rawalpindi Chamber of Commerce and Industry (RCCI) has called for abolition of sales tax on machinery equipment and packaging materials used in pharma industry. The government has removed the GST on the end product of pharma industry, whereas there is sales tax on purchases of machinery, equipment and packaging material.
The KCCI said the recent amendment in Section 73 of the Sales Tax Act, 1990, made compulsory that payment of sales tax should be made from banking instruments from a specified banking account of the buyer to the specified banking account of the supplier. The word specified banking account of buyer and specified banking account of supplier be changed with banking account of the buyer and banking account of supplier.
The KCCI has called for appropriate amendments/clarifications in Sales Tax Act, 1990.
The Pakistan Tanner Association (PTA) has called for giving sales tax exemption to generators more than 250 KVA used in the industries.
INCOME TAX: The Pakistan Canvas and Tents Manufacturers and Exporters Association has proposed to withdraw the implementation of Section 111 of IT, which envisages the power of income tax officer to assess the income/expenditure of any assessee for unlimited period.
The Indenters Association has said the government in the budget 2003-04 has reduced withholding tax on the commission of indenters (imports) from 10 to five per cent, but the government has not declared it as full and final tax liability as it was before July 1, 2002. The government should clarify/declare that five per cent withholding tax be considered as full and final tax liability.
