Talks on Monday between Central Board of Revenue (CBR) and Pakistan Cotton Ginners Association (PCGA) ended up in a deadlock when the two sides remained pegged to their stated positions.
The PCGA wanted nothing less than withdrawal of sales tax on cotton seed/oil. The CBR team turned down the demand, simply, on the ground that the policy decision was to stay.
The CBR team headed by Member Sales Tax Shahid Ahmed managed to keep the ball rolling by announcing another round of talks to be held on Tuesday.
Sources told Business Recorder that CBR would offer a simplified procedure for collection of sales tax on cotton seed/oil, but may not accede to PCGA demand.
The PCGA delegation comprising Chairman Jethanand Kohistani, and Haji Ibrahim made a presentation to the CBR on problems faced by the ginning industry. It also highlighted various issues of oil mills.
The PCGA team told the official team that imposition of sales tax on cottonseed/oil was negation of government policy of providing relief in taxes to the small industry. It added that sales tax on cottonseed would prove double-edge sword. On the one hand it would add to tax evasion and on the other it would kill the industry.
The delegation reiterated its stance that sales tax on cottonseed would force the oil expeller units to close down and deprive over 150,000 families which are linked with the industry.
A PCGA delegation member told this correspondent that the industry would not accept anything but withdrawal of sales tax and failure in talks would force it to take other options into account.
The PCGA presentation covered areas which in its opinion would adversely be affected by sales tax. These were cotton estimates and production, revenue collection, separate sales tax registration for cotton ginning and oil mills and condition of section 73.
The PCGA team made it clear to the CBR team that none of these areas would improve by imposing sales tax. Rather, in its opinion, its impact on the industry would be terrific.