FBR withdraws 17pc sales tax on bran

Published June 24, 2021
A labourer grinds wheat into flour at a market in Rawalpindi. — AFP/File
A labourer grinds wheat into flour at a market in Rawalpindi. — AFP/File

ISLAMABAD: Flour millers on Wednesday linked calling off strike with a written clarification from the Federal Board of Revenue (FBR) that no change is made in the existing tax regime.

Pakistan Flour Mills Association (PFMA) has already announced plans to go on a two-day strike from June 24 as a protest against budget measures proposing a hike in income tax on turnover of flour mills and increase the sales tax on bran.Earlier, FBR Chairman Asim Ahmed in a WhatsApp message to Dawn said that in the Finance Bill 2021, the table prescribing tax rates for a minimum tax on a turnover basis has been substituted for providing relief to retailers of fast-moving consumer goods including flour mills and refineries. However, inadvertently the words, “flour mills” could not be mentioned.

“We will be meeting the FBR chairman on Thursday and if they [tax authorities] release a statement on Wednesday night we’ll call off our strike in the morning,” Rawalpindi-Islamabad Flour Mills Association Patron Tariq Sadiq told Dawn.

Flour millers seek written assurance for calling off strike

Mr Sadiq said Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood Khan called PFMA Punjab chief Asim Raza and assured him that clarifications on both turnover and sales tax issues will be issued tonight.

In a late night statement issued on 11:38pm, the FBR clarified that the minimum tax applicable on flour Mills would remain at 0.25pc of the turnover instead of 1.25pc as being generally interpreted.

It further stated that in order to boost the government’s drive to keep inflation under control and to give maximum relief to the business community, General Sales Tax (GST) on wheat bran proposed to be enhanced to 17pc in the Finance Bill 2021 is also being taken back.

No statement was issued by PFMA regarding calling off of their strike till the filing of this story after the clarification issued by the FBR.

It’s an error that has already been noted and would be rectified in the amended bill, the chairman further said.

Contrary to this, the flour mills association has interpreted this change as if the current budget increased turnover tax from 0.25pc to 1.25pc. “We have made no change in turnover tax of the flour mills,” the chairman further replied to the WhatsApp message.

The second biggest issue of the flour mills is the proposed move of imposition of 17pc sales tax on bran (choker), a by-product of wheat grinding.

The chairman FBR has shown his ignorance about any such tax on bran. Asked whether there is 17pc sales tax on bran, the chairman replied ‘not there’.

Through the Finance Bill 2015, a sales tax of 8pc was levied on bran but withdrawn as the millers started protesting.

Published in Dawn, June 24th, 2021

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