ISLAMABAD, July 27: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has asked the Federal Board of Revenue (FBR) to remove the irritants caused by changes introduced in the budget.

The FPCCI delegation led by Sheikh Shakil Ahmed Dhingra in a meeting with Member Sales Tax Musarrat Jabeen raised a number of irritants, which caused hindrances in the smooth flow of trade.

The FPCCI leader said that SRO 660 was in conflict with the procedure for commercial imports, where upon it was clarified that commercial importers paying 2 per cent value addition at import stage will be exempted from paying further tax on value addition on subsequent supply in the same state whereas in SRO 660 three per cent further sales tax will be charged by the government and autonomous bodies and they will have to enter into the hassle of refund so they may be exempted from this charge.

Ms Jabeen was of the view that while supplying to the government and autonomous bodies the value addition tax paid by the commercial importers will not render them to refund. However, she said this situation will be studied in the first week of October and if refunds to commercial importers are created the FBR will re-look into the matter.

It was pointed out that where the value addition tax paid by the commercial importer is more than the input tax, no procedure has been provided and as per their explanation in the special procedure for commercial importers, it gives the understanding that the commercial importers showing value addition more than their input tax will be subject to audit.

The member sales tax clarified that a commercial importer can invoice for value addition more than their input tax and in case the output tax exceeded input tax it shall be paid by the importer in their quarterly return and they will be exempted from Audit.

It was decided that the commercial importers, who did not pay value addition tax within the stipulated time, they should pay the tax at the rate of 10 per cent, as per regime prior to July 1, with their return.

It was requested that where the importers had paid sales tax at higher rate of 20 per cent and subsequently the rate of sales tax on these items has been reduced to 17.5 per cent and 15 per cent may be allowed to adjust their input in value addition tax and must not be asked to pay further.

The member agreed to the suggestion and will issue a clarification in this regard.

It was pointed out that the Customs model collectorate was charging withholding tax on 2 per cent value addition while the appraisement collectorate is not and since in the last regime no withholding tax was charged on the value addition, the former should also not charge withholding tax on value addition.

Member sales tax agreed to the proposal.It was informed that on 27th and 28th June the model collectorate charged higher rate of sales tax than effective rate due to technical reasons and added that excess amount so charged should be refunded. The plea was accepted.

The criteria for sale of stocks as on 30th June was requested to be clarified and it was pleaded that those stocks which as per fixed regime have fulfilled their liability of 10 per cent value addition must be allowed to be sold as prior to the new regime.

The FBR will issue a clarification but subject to the condition that output tax may not exceed input tax.

Shakil Dhingra informed the member that the refund of sales tax was stuck up since 2005 when zero rate was introduced due to software problem. The collector sales tax refund Karachi says that either get it audited from a chartered accountant or wait till he gets proper software. This is not fair and if he feels he can get it audited. The plea was accepted.

He further said that the importers were worried that by paying 1 per cent special excise duty they will be subject to excise rules and will have to maintain excise registers as required in the Excise Act and whether this 1 per cent is adjustable or not.

It was informed that due to levy of excise they will not be subject to Excise Act and will not be required to maintain record as per excise rules and the levy is adjustable.

The FPCCI members said that exporters were receiving notices after years of their refunds that refund made to them on the basis of invoices have been later blacklisted or included in the suspected list and demands are being raised, which tantamount to harassment.

The member sales tax was of the view that how can they refund the amount, which has not been deposited in the exchequer; however, the board will look into the matter and ensure that no harassment is made.