Sialkot Chamber of Commerce and Industry (SCCI) in its budget proposals for 2010-11 has suggested that the budget should address all relevant issues instead of bringing any additional mini-budgets time and again during the year. The main focus in the budget proposal was on customs, income tax and sales tax related issues.
The manufacturers cum exporters mostly import raw materials without utilising customs facilities, especially while importing the required material on urgent basis. In this case on certain materials they have to pay 25 percent customs duty due to which the higher cost of production leads the toward un-competitiveness. It was proposed that the upper limit of customs tariff should be maintained at 15 percent.
The industries of Pakistan have been facing serious energy crisis for the last few years due to which they have to use generators for the production of export orders. The electric generating sets and rotary converters of an output not exceeding 5 KVA (HS Code 8502.1110) can be imported on zero percent customs duty.
It was mentioned that 5 KVA generator cannot fulfil the energy requirements of most of the export industrial units. Hence, they have to import generators of higher capacity under HS codes 8502.1120, 8502.1130, 8502.1190, 8502.1200, etc by paying customs duty of 20 percent. It was proposed that the generators exceeding 5 KVA may also be allowed the import on zero percent for one year and in preceding years 5 percent import duty may be levied.
The raw material of polyester yarn is used for the products of sportswear. At present anti-dumping duty has been imposed on its import, which results in increase cost of production. It was suggested that anti-dumping duty might be lifted from polyester yarn so that the manufacturers of sportswear could get raw material at cheaper rate in order to be competitive in international market.
The leather industry has been producing various products from almost the same input material like jackets, trousers, waist coats, overcoat, coats, chaps, gloves, etc falling under HS Code 4203.1010, 4203.1020, 4203.1030, 4203.2100, etc respectively but SRO 210(I)/2009, dated 5th March, 2009 authorises different duty draw back rates of 2.42%, 1.84%, 1.59%, 1.54% respectively, which needs amendment.
It was proposed that SRO 210(I)/2009, dated 5th March, 2009 may be amended authorising duty draw back rate of 2.4 percent on leather garments including gloves. Likewise the Surgical industry of Sialkot has been producing various products from almost the same input material like scissors, surgical scissors, surgical knives, manicure or pedicure sets and instruments, etc falling under HS Code 8213.0000, 9018.9030, 9018.9040, 9018.9090, 8214.2000, etc respectively but SRO 211(I)/2009, dated 5th March, 2009 authorises different duty draw back rates of 0.75% on former four (4) products and 2.73% on 8214.2000 which needs amendment.
It was proposed that SRO 211(I)/2009, dated 5th March, 2009 may be amended authorising duty draw back rate of 2.73 percent on all surgical and veterinary instruments including manicure and pedicure sets. The manufacturers-cum-exporters produce their products according to the design and requirements of the customers, for which they have to import samples from the customers and to pay customs duty. It is suggested that sample of the customers be allowed duty-free import to Pakistan to facilitate exports industries of Pakistan.
INCOME TAX: The government can provide better facilities to its citizens by collecting taxes from them and through that revenue every strata of society is provided facilities. Maximum revenue can only be obtained by broadening justifiable tax net. In order to achieve the objective, wealth tax may be levied on all non-productive properties like residential plots whereas the productive properties like manufacturing factories should be exempted from wealth tax up to the value of Rs 10 million.
In order to remove unnecessary disparity created between commercial exporters and manufacturer-cum-exporters, it was suggested that words "manufacturer-cum-exporters" be replaced with the words "exporters" appearing in sub-clause (45) of second schedule.
The commercial banks deduct withholding tax at the rate 0.3 percent on more than Rs 25,000 cash withdrawal per day under Section 231A. Keeping in view inflation, it was proposed that this limit be increased to Rs 50,000. It was further suggested that exporters/tax payers falling under presumptive tax regime be excluded from withholding tax on cash withdrawal in order to avoid hassles of firstly paying and then refunding which would not only facilitate exporters but the workload of the respective departments would also be minimised.
As the exports industries are paying withholding tax of 1 percent on payment realisation of exports proceeds under Section 154, so intermediary tax of 0.5 percent under Section 153 (1A) for getting manufacturing services from suppliers be eliminated.
The exports industrialists remain busy in producing and exporting value added products to international markets where tax audits consume considerable time. It was proposed that Section 177 (7) be amended in such a manner that audit with respect to all relevant taxes of a company be conducted once in a year and if an audit of the company has been conducted successfully, the same company should not be audited for next five years.
Tax collected on import of "packing material" has been treated as minimum tax as a result of addition of words "packing material" in sub-section (8) of section 148. It is suggested that tax deducted on import of "Packing material" by exporters may be treated as advance tax instead of minimum tax.
Any discrepancy on the part of taxpayer is dealt as criminal act creating harassment for taxpayers. It is suggested that such discrepancy may be taken as civil offence instead of criminal act ie 489F may be omitted from Pakistan Penal Code. Value Added Tax (VAT) is being introduced in place of Sales Tax, which is quite new for taxpayers in Pakistan, due to which they will face problems and difficulties.
It was suggested that VAT be deferred for certain period of time and till that time its awareness among all stakeholders be created through workshops, conferences and interaction with FBR. In the initial stage, the implementation of VAT may be done from minimum rate ie 4 to 5 percent.
Under SRO 509(I)/2007, dated June 9, 2007, sales tax on goods like sports goods, surgical goods, textile and articles, leather and articles, etc is charged at the rate of zero percent on the supply and import thereof, which provided facilitation to the export industries. This facility be remained intact all the temporary schemes as well for the larger interest of the export industries.