Karachi: The Karachi Branch Council (KBC) of Institute of Cost and Management Accountants of Pakistan (ICMAP) and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) organized a Seminar on Pre-Budget 2012-13 today.
President, FPCCI, Haji Fazal Kadir Khan Sherani, while delivering the Keynote address said that the FBR should withdraw the multiple rates of sales tax and apply a uniform rate of 9% for all products. This will not decrease the revenue of the government, as smuggling will die down and all the quantities will be imported through the legal channel, thereby reducing the size of the parallel economy.
He further proposed that under section 3(3)(a), a supplier is supposed to collect and deposit tax, whereas after introduction of Section 8 A, joint and several tax liability was placed for both buyer and seller for non-payment of output tax by the seller. This not only clashes with section-3(3) (a), but is also against the principles of natural justice.
At present, the Department of Inland Revenue is issuing notices to commercial importers for doubtful/illegal refunds obtained by manufacturers, while investigating the cases of refund claimants, whereas, commercial importers discharge their liability by paying Sales Tax and Value Addition Tax at the import stage and therefore, they should not be held responsible for this matter.
Chief Guest of the occasion informed the audience that Federal Board of Revenue is seriously considering a budget proposal to reduce federal excise duty on cement from fiscal (2012-13) under the government’s commitment to totally abolish excise duty on the commodity in phases.
Asif Kasbati, Director Tax Services, A F Ferguson and Co, spoke on proposals for Income Tax and emphasized that Corporate income tax rate should gradually be brought down to 25% and 30% for listed and unlisted companies respectively as 35% rate is very high viz-a-viz 25% tax date on other business houses. He vehemently opposed to Final Tax Regime for corporate sector.
He suggested to allow set-off of prior years’ losses in order to promote Group Taxation and Amalgamation. As certain sectors have already allowed to be taxed at Minimum tax rate of 0.5%, he suggested that the rate should be restored for all the taxpayers.
He recommended that powers to set-aside be given to Commissioner Appeal and automatic stay of demand be allowed on payment of 15% and 50% respectively at Commissioner and Appellate Tribunal stages. Kasbati also proposed that the basic exemption limit be enhanced to Rs 450,000 owing to high inflation rate. To promote capital market, he recommended that tax credit for investment in shares be increased from Rs 500,000 to Rs 700,000 and retention period be restored to one year.
Adnan Mufti of Sheikha Mufti and Co., told the audience that in the last Budget, the Finance Minister announced on the floor of the House that Excise Duty Regime is being condensed and would entirely be withdrawn in next 2 years. Despite such a categorical announcement, we saw ‘Sugar’ was placed under the Excise Law and sales tax was withdrawn there from.
He said that Financial Press has reported that the current year’s budget will see many other items would be brought under the Excise Laws. Revenue pressures override policy decisions. He said that Industrial notes might be drawn by FBR in consultation with ICAP, and ICMAP for significant sectors and standard ratios of wastage occurring during such processes.
Shaikh Shakil Ahmad, Vice President, FPCCI, while welcoming the audience said that in the past, retention of records was required to be kept for the last three years, which was increased to five years, and has now been extended to six years in the latest Finance Act, with the further provision that in case of litigation, the time period is extended until finalisation of the legal proceedings.
He added that the FPCCI has suggested that the time period of 6 years for retention of record, particularly in the electronic age, where all the basic data of purchases and sales are reported online, has no justification.
Mian Zahid Hussain, Chairman Standing Committee of FPCCI said that on Sales Tax said that The FPCCI further suggested that in cases where no revenue impact is involved, but where the purpose of the revision is just to correct minor particulars, eg, STR number, invoice number, GD, etc; no prior approval of the Commissioner may be required. The FPCCI understand that the basic intent of section 73 is to document the economy and business transactions.
Anis ur Rehman, Chairman Karachi Branch Council, proposed that that a clause shall be inserted under section 113(3) to specifically exclude insurance premium from the definition of turnover. Alternatively, turnover for insurance companies should be taken as reduced by the re-insurance premium by incorporating appropriate amendment in Part III of Second Schedule. He added that Proposals of earlier submitted by various associations was not properly entertained by the Government and again it is restricted upto 1% of advances merely exclusion of consumer and SMEs is insufficient.
Furthermore, FBR in most cases misinterpreting the word of “total advances” as “net advances” which is un-justified. It is suggested to issue a clarification in this respect to interpret “total advances” as “gross advances” shown in the Balance sheet.
The Seminar was summed up by Muhammad Hanif Ajari, Director Strategic Development, Getz Pharma.
For more information, contact:
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
Federation House, Main Clifton, Karachi, Pakistan
Tel: 0092-21-35873691, 93-94