ISLAMABAD, June 18: The government has extended the duration of exemption certificate from three months to one year for importing raw materials without payment of withholding tax in order to provide facilities to the manufacturers.
Central Board of Revenue official spokesman and member direct taxes Vakil Ahmad Khan said on Wednesday the necessary amendments were introduced in the income tax law to authorize the commissioner of income tax to issue exemption certificate for one year.
A detail circular No 2 of 2003 was issued here on Wednesday specifying the procedure for issuance of certificate.
He said the manufacturers were allowed to import raw materials for consumption in their industrial units without payment of withholding tax at the import stage on the basis of exemption certificate issued by the commissioner concerned.
The basis for issuance of such certificate was the payment of tax equal to the tax liability of the latest tax year, whether paid in cash or collected as a withholding tax.
These certificates were LC specific and for a period of three months only with the result that the taxpayers had to obtain the certificate for a number of time in a tax year, he said.
The CBR spokesman said the manufacturers, who paid advance tax under section 147 of the Income Tax Ordinance 2001 on quarterly basis, would be entitled to exemption certificate. The condition of full payment of tax equal to the tax paid for the latest tax year has been dispensed with, he added.
Mr Khan said the certificate should neither be on quarterly basis nor LC specific. And on filing application in the prescribed form and manner, the certificate would be issued within 24 hours of the receipt of the application, he said.
The spokesman said the only obligation of the manufacturers would be to pay advance tax on quarterly basis as required under the law. If the manufacturers sell raw materials in the market or do not pay any of the quarterly instalment of advance tax, the commissioner may cancel the exemption certificate by an order in writing.
In addition to above, the manufacturers have been allowed the facility of exemption certificate for import of equipment, plant and machinery for own use, the CBR spokesman added.