KARACHI, Aug 7: The tax relief given on export of branded rice in the new trade policy (2003-04), could not be availed by exporters as the government has yet to notify the procedure, rice exporters said.

Presently the concessional rate of income tax at 0.75 per cent was applicable to export of branded rice in packs of 5 kg only. Whereas normal tax rate (withholding tax) on export of rice and for packs of over 5 kg was 1.25 per cent.

However, in the new trade policy announced in the first week of last month the tax concession and relief of 0.75 per cent was extended to all branded packs of rice having a weight of up to 50 kg.

Even the banks through circulars have advised their exchange dealing branches not to allow concessional rate of income tax to branded packs of over 5 kg. This has damaged the export trade mostly of small and medium size exporters of rice.

The banks told their clients that since the notification had not released, they could not extend the relief, which may had been withheld by the government for want of definition of brand the trade policy had made conditional.

According to the wordings of the new trade policy: “At present, concessional rate of income tax at 0.75 per cent is applicable to export of branded rice in packs of 5 kg only. The facility will be extended to all branded packs of rice up to 50 kgs. In this context, a brand definition and procedure will be developed.”

In other words it means that as long as the Ministry of Commerce does not come out with a definition for ‘brand’ and also do not lay down or develop procedure the relief could not be availed, exporter asserted.

However, a loud whispering is going on amongst rice trade circles that the government intends to make it mandatory upon exporters to register their brands in the country and in a buyer’s country.

But exporters have expressed their great resentment over the move as they believe that this will only enhance their cost and they will have to face a lot of hassle in getting their brand registered in foreign country.

The condition of registering the brand inside the country is welcome but to do the same in buyer’s country will hamper exports as most of the exporters, particularly small and medium size, may not be able to do so, another exporter said.

They believe that the only expected outcome of such a policy was to benefit big exporters and cartels as they would be in a position to fulfil this condition, which will ultimately monopolize the rice export trade.

Exporters are also questioning the wisdom of the ministry of commerce for not defining the ‘brand’ and for not laying down procedure at the time of announcement of the trade policy.