WHT exemption on plants, machinery: FBR slaps strict conditions on tribal areas' residents

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed strict conditions on the residents of tribal areas for availing exemption of withholding tax on the import of plant, machinery, equipment or industrial inputs.

The FBR has issued a new procedure for the individuals, companies and association of persons resident in the tribal areas.

According to the FBR's circular, in pursuance of the amalgamation of FATA/PATA regions via 25th Amendment to the Constitution, in order to boost economic development therein, the government, vide Clause (146) of Part I of 2nd Schedule to the Income Tax Ordinance, 2001, exempted income of any individual domiciled or company and association of persons resident in the Tribal Areas forming part of the provinces of Khyber Pakhtunkhwa and Balochistan with effect from June 1, 2018 to June 30, 2023. The provisions of sections in Division III of Part V of Chapter X and Chapter XII" of the Ordinance 2001, pertaining to withholding taxes have also been rendered inapplicable to FATA/PATA-domiciled tax persons vide Clause (110) of Part IV of 2nd Schedule to the Ordinance

A standardized procedure for the issuance of "Exemption Certificate" on quarterly basis is being rolled out so as to ensure fair operationalisation of the exemptions enshrined in the law. Accordingly, a FATA/PATA-domiciled person appearing on the Active Taxpayers List instituted by FBR in terms of section 181A of the Ordinance 2001 and intending to import "plant, machinery, equipment" or "industrial inputs" for installation or consumption at his own manufacturing site would lodge a written application to the Commissioner Inland Revenue (CIR) concerned providing production capacity of the manufacturing unit, and if the same has increased over time, the month from which the enhanced production capacity was installed along with particulars of the additional manufacturing capacity.

The imports would also provide month-wise quantity of raw material imported and purchased locally; quantity of stock available from earlier imports; month-wise details of gas/electricity consumed since July, 2020; month-wise particulars of goods produced; month-wise details of post-dated cheques (PDCs) deposited earlier with Customs authorities, if any; list of buyers of the goods produced; bank statement for the past quarter; electricity/gas bills for the past quarter and month-wise proof of Federal Excise paid only in case of goods covered under the Federal Excise Act, 2005.

The CIR would ensure that particulars supplied by the taxpayer are verified before the issuance of Exemption Certificate. In case any data are not verified, the taxpayer would be given an opportunity to complete the application, provide the required information, and make up the deficiency. The Exemption Certificate issued will be directly mailed to the Collector Customs concerned with a copy thereof being duly marked to Member (IR Operations) and Member (Customs Operations), and under no circumstances will be handed over to the taxpayer. If the CIR decides to reject the application for an Exemption Certificate, the previous PDCs deposited would be encashed, the FBR added.

Copyright Business Recorder, 2021