KARACHI, April 21: The Federation of Pakistan Chambers of Commerce and Industry has urged upon the government to provide minimum protection of 10 per cent in customs duty between imported finished products and imported intermediary products for local manufacturing of similar products.

The apex body of trade and industry in its budget proposals related to customs duties, sales tax, income tax and excise duty has also asked the government to promote tax culture and enlarge its base by removing irritants confronting trade and industry.

The FPCCI strongly pleaded the case of allowing imports of plant, machinery and equipment, not manufactured locally, zero rated from customs duty. Similarly, treatment is being also sought for raw materials, not produced locally, as such steps the FPCCI feels, will help promote industrial activity in the country.

However, the apex body is of a strong view that rationlization of tariff and customs duties was equally important for promotion of economic activity and industrial growth. At present several national headings and sub-national headings are creating hurdles and there was greater need to minimize the number of national and sub-national headings. Similarly, different HS codes attracting different rate of duties may be grouped together under one heading, it added.

It also suggested the constitution of out of court dispute resolution committee, which would help provide relief both to the department and the business community. The apex body also sought some amendments in SRO 374(I)/2002, section 36, 38, 40(A), 45B and section 46. It demanded that a time limit might be fixed under section 57.

The FPCCI has opposed the concept of further tax of three per cent on sales to the unregistered buyers and pointed out that this is the main source of flying invoices. Many importers and traders of wholesale nature do not have a profit margin of three per cent, they are compelled to do this for survival to avoid three per cent further tax, it added. This is one of the main causes of flying invoices.

There is strong demand that registration procedures with sales tax be simplified and application should be processed within 15 days time. The FPCCI pointed out that it was against the principles of natural justice that a collector could be satisfied on results of investigations alone and suspend registration without according a chance to the accused to rebut the charges.

Therefore, it demanded that section 21(4) of the Sales Tax Act, 1990 might be amended to provide a chance of reply to taxpayer, and effect of black listing should be prospective.

With regard to income tax, the FPCCI is seeking restoration of exemption granted under the Income Tax Ordinance, 1979. It has asked the CBR to amend section 3(39). The words "otherwise than by a crossed cheque drawn on a bank or through a banking channel from a person holding a National Tax Number Card" be substituted with the words "other than by any prevalent mode of banking instrument."

The powers given under section 175 to enter and search premises should be restricted to business premises only and that also after the commissioner issues a show-cause or prior notice duly served on the taxpayer.

The FPCCI has forcefully demanded that income tax on all categories of taxpayers be reduced by a minimum of 10 per cent. Suitable reduction should also be made in rates of withholding taxes and marginal tax relief should be provided.