The Federal Board of Revenue (FBR) may enhance withholding tax rate from 3 percent to 5-6 percent for the manufacturers/industrial units engaged in import of raw materials, in the upcoming budget for 2011-12.
Sources told Business Recorder here on Sunday that the FBR is examining a budget proposal to increase the rate of withholding tax from current 3 percent to 5-6 percent for the manufacturer/industrial units engaged in the import of raw materials in budget for 2011-12. In case the proposal is finalised by the FBR, the same would be forwarded to the Ministry of Finance for consideration. If the government increases the rate of withholding tax on import of industrial raw material, it would be a revenue generation measure in coming budget.
Details show that through an amendment in the Income Tax Ordinance, 2001 brought about by the Finance Act, 2010, rate of Advance Tax under section 148 of the Income Tax Ordinance 2001 was enhanced to 5 percent, as against previous rate of 4 percent for the imports of goods by commercial importers.
The manufacturer/industrial undertakings importing raw materials for their self-use shall remain covered under clause (9) of Part-II of Second Schedule to the Ordinance, and rate of deduction of advance tax deductible in their case, remained at 3 percent in last budget for 2010-11.
The exemptions from deduction of the advance tax as available under the existing provisions of Income Tax Ordinance, 2001, shall apply accordingly. The amendments brought in through Finance Act, 2010 was effective from July 1, 2010 onwards.
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