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Battery makers seek concessionary duties

Updated May 22, 2019

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Manufacturers say additional duty on input items that are not manufactured locally has adversely impacted the sector. Dawn/File
Manufacturers say additional duty on input items that are not manufactured locally has adversely impacted the sector. Dawn/File

ISLAMABAD: Battery manufacturers on Tuesday asked the government to extend the benefit of concessionary rate of customs duty on import of raw materials, components, sub-components of automotive batteries to all types of locally made storage batteries.

In their proposals submitted to the Federal Board of Revenue for the upcoming budget, battery manufactures asked the government to exempt customs duty on imports made under SRO 655(I)/2006 dated June 22, 2006 from levy of 2 per cent additional customs duty under SRO 630(I)/2008.

Justifying the proposal, manufacturers said additional duty on input items (raw materials, components, sub-components of the automotive industry and automotive batteries) that are not manufactured locally has adversely impacted the sector which is highly cost sensitive.

The manufacturers maintain that extending benefit of import of raw materials, components and sub-components used in manufacturing of all type of storage batteries will encourage battery manufacturers to invest in technology and develop specialised batteries for solar power, UPS, generators, etc.

Regarding sales tax, the battery manufacturers said that on the purchase of taxable goods from un-registered persons, companies are liable to deduct sales tax at the rate of 1pc. However, this encourages some companies — involved in unfair practices — to declare a large number of purchases from unregistered persons and get away by just paying 1pc of the value of purchases.

The deduction of full amount of applicable tax will discourage undocumented sales and purchases, the manufacturers said.

Furthermore, it was proposed that uniform rate of sales tax at the rate of 5pc should be applied at each stage of lead buying. This includes sale of lead scrap (raw lead of battery and factory scrap), sale of reclaimed lead (semi-processed) and refined lead/antimonial lead (fully processed), whereas the 100pc withholding sales tax should be at buyer end.

The battery makers have said that rationale behind this proposal is that presently reclaimed lead is subject to 5pc sales tax, whereas lead scrap and refined lead/antimonial lead are subject to 17pc sales tax.

All these three stages of lead buying are processed in improved form gradually after some value addition and finally the processed form is consumed in manufacturing of batteries.

The battery manufacturers stressed that the proposals are aimed at promoting fair practices and discourage tax evasion in the industry as well as for technological advancement in the industry.

Published in Dawn, May 22nd, 2019