ISLAMABAD, Feb 13: The government has abolished withholding tax on supply of the goods provided these were imported by same person.

A notification No SRO97(I) 2002, issued by the CBR here on Wednesday, amends the existing clause (9B) of Part IV of the Second Schedule to the Ordinance 1979.

CBR official spokesman and member direct taxes, Vakil Ahmed Khan, said the board had exempted the goods, imported against payment of six per cent withholding tax, from further levy of 3.5 per cent withholding tax at the stage of supply.

It may be added that the government was also planning to abolish withholding tax levied on telephones, outstations cheques and petroleum products from July 1, 2002.

Mr Khan said that the decision had been taken in the tax department after a threadbare study of the grievances it repeatedly received from suppliers and importers against withholding tax payment at the rate of six per cent of value of goods imported and further withholding tax at the rate of 3.5 per cent (five per cent for persons not holding National Tax Numbers) out of payments for supplies of the same state goods.

He said the exemption had been offered under Section 50(4) of the Income Tax Ordinance, 1979 provided the goods are supplied by the same person who imported them, withholding tax was paid thereon at import stage and the goods are supplied in the same state in which these were imported i.e. without any value addition.

The notification reads as: “(9B) The provisions of sub- section (4) of section 50 shall not apply in respect of payments received by a resident person for supply of such goods as were imported by the same person and on which tax has been paid under sub-section (5) of section 50.”