Section 153-A: FBR appears reluctant to withdraw 0.5pc tax

MUHAMMAD ALI

KARACHI: The Federal Board of Revenue appears reluctant to withdraw newly-imposed 0.5 percent tax under Section 153-A of Income Tax Ordinance, 2001, despite the assurance of Finance Minister Hafeez Sheikh to the business community, it is learnt on Friday.

According to sources, the government instead of penalising unregistered persons imposed the said levy across the board, creating additional tax burden on the already registered persons.

They said Hafeez during his recent visit to Karachi assured the business community to resolve their grievances regarding Section 153-A, but after over a month, no positive measures were taken by the revenue body.

The sources said the chief commissioners in last chief commissioners’ conference had demanded of the authority to review the budget targets as they considered their budget targets as formidable task to achieve during present economic conditions.

They said the chief commissioners were of the view that the revenue target could not be achieved as the major chunk of revenue ‘tax on services’ was now being collected by provincial authorities.

Keeping these complaints in view, the board has reservations to withdraw the Section 153-A as if the said section put into abeyance through SRO, the revenue target would become difficult to achieve, the sources maintained.

On the other hand, registered manufacturers are being penalised after the introduction of Section 153-A, and forced to pay an additional levy from their pockets as the National Tax Number does not determine the business categories for wholesalers, distributors, importers, and exporters.

The sources said the Section 153-A was inserted in the Finance Bill 2012-13 after the withdrawal of the requirement for furnishing CNIC/NTN of sales made to unregistered persons. Moreover, they said Section 153-A required all manufacturers to collect 0.5 percent income tax from sales made to their distributors and wholesalers.

“On the one hand, the board has inserted Section 153-A to bring undocumented segment into the tax net. On the other, Tax Amnesty Scheme is going to be introduced for whitening all untaxed income,” said Rehan Jafferi, Vice President Karachi Tax Bar Association (KTBA).

“Taxpayers are considered to be the assets of the country but in Pakistan, unregistered persons and tax evaders are being facilitated at the cost of genuine taxpayers,” he said.

Rehan further said that 0.5 percent tax under Section 13-A of Income Tax Ordinance, 2001 was imposed without consultation that created immense difficulties for the taxpayers, especially manufacturers.

He said the number of taxpayers, who had lesser profit margin than the said levy, had no option but to pay the same from their pockets as unregistered suppliers have threatened them to suspend all business transactions, if the said levy was deducted from their sales.

He urged the FBR to issue SRO to deactivate the Section 153-A, saying that although the withdrawal of this section could only be made by the legislative body, the board was empowered to suspend the same till its withdrawal from the Ordinance.