ANL 12.30 Decreased By ▼ -0.67 (-5.17%)
ASC 14.10 Decreased By ▼ -0.35 (-2.42%)
ASL 15.04 Increased By ▲ 0.09 (0.6%)
AVN 100.25 Increased By ▲ 2.05 (2.09%)
BOP 8.43 Decreased By ▼ -0.06 (-0.71%)
CNERGY 6.40 Decreased By ▼ -0.22 (-3.32%)
FFL 9.07 Decreased By ▼ -0.08 (-0.87%)
FNEL 8.67 Decreased By ▼ -0.29 (-3.24%)
GGGL 13.18 Decreased By ▼ -0.67 (-4.84%)
GGL 19.90 Decreased By ▼ -0.70 (-3.4%)
GTECH 9.40 Decreased By ▼ -0.30 (-3.09%)
HUMNL 6.60 Decreased By ▼ -0.03 (-0.45%)
KEL 3.10 Decreased By ▼ -0.09 (-2.82%)
KOSM 4.05 Increased By ▲ 0.03 (0.75%)
MLCF 33.48 Increased By ▲ 0.65 (1.98%)
PACE 4.06 Increased By ▲ 0.04 (1%)
PIBTL 7.17 Decreased By ▼ -0.03 (-0.42%)
PRL 14.11 Decreased By ▼ -0.28 (-1.95%)
PTC 8.69 Decreased By ▼ -0.21 (-2.36%)
SILK 1.33 No Change ▼ 0.00 (0%)
SNGP 33.60 Decreased By ▼ -0.27 (-0.8%)
TELE 17.25 Decreased By ▼ -0.05 (-0.29%)
TPL 13.02 Decreased By ▼ -1.05 (-7.46%)
TPLP 25.56 Decreased By ▼ -2.07 (-7.49%)
TREET 38.70 Increased By ▲ 0.64 (1.68%)
TRG 81.74 Decreased By ▼ -6.62 (-7.49%)
UNITY 27.31 Increased By ▲ 0.17 (0.63%)
WAVES 14.70 Decreased By ▼ -0.34 (-2.26%)
WTL 2.14 Decreased By ▼ -0.07 (-3.17%)
YOUW 7.54 Decreased By ▼ -0.16 (-2.08%)
BR100 4,585 Increased By 15.6 (0.34%)
BR30 17,569 Decreased By -127.6 (-0.72%)
KSE100 44,826 Decreased By -7.5 (-0.02%)
KSE30 17,666 Increased By 14 (0.08%)

coronavirus
Coronavirus
VERY HIGH
Source: covid.gov.pk
Pakistan Deaths
29,042
524hr
Pakistan Cases
1,345,801
6,80824hr
Sindh
513,046
Punjab
456,992
Balochistan
33,780
Islamabad
113,688
KPK
182,950

ISLAMABAD: The Federal Board of Revenue (FBR) has opposed exemption of private parties from 10 percent Withholding Tax (WHT) engaged in business with Pakistan Railways, official sources told Business Recorder.

Ministry of Railways is encouraging private sector participation in railways under the reforms plan approved by the Cabinet. One of the major initiatives of the Ministry of Railways is to engage private sector in all areas including commercial management of trains, outsourcing of freight trains and track rehabilitation.

In accordance with Section 236-A of the Income Tax Ordinance 2001 Pakistan Railways, being withholding tax (WHT) agent, has to recover WHT @10% of the total bid money with first installment. Under the law, it is treated as advance income tax adjustable against final tax liability of the private parties.

The sources said private parties have been agitating that advance payment of VVHT @ 10% of total bid money is very high as compared to their actual annual income tax liability and it adversely impacts the requisite liquidity requirement for successful operation of the outsourced railway services. Private parties have serious concerns about the refund mechanisms at FBR. Resultantly, WHT has become one of the major impeding factors in private sector participation in Railways.

The Ministry of Railways argued that FBR must understand that if Railways carries out these operations itself FBR gets zero tax on Railways revenue, which is exempted from tax. In case of outsourcing its business to private sector, there will be substantial contribution to the national exchequer in the form of taxes. In FY2020-21, in first 3 quarters, Railways contributed tens of millions as tax collection from its private partners. As per law, withholding tax is applicable on the profit and not the total revenue. The WHT charged on the total bid amount offered by the private party is not justified. It is hindering the process of outsourcing of train operations and other services by Pakistan Railways.

The engagement of private parties through outsourcing of commercial management of trains is imperative for fetching more revenue, which, in turn, would reduce losses and would be a positive step towards self-sustainability. The private sector stresses that getting refund of advance tax is extremely cumbersome process and lacks transparency.

Ministry of Railways has proposed that the collection of [email protected] 10 upfront in case of Railways may be exempted and the private companies may be allowed to make tax adjustments at the time of filing of annual returns, adding that FBR may be requested to issue SRO to implement this proposal.

Copyright Business Recorder, 2021

Comments

Comments are closed.