The Federal Board of Revenue (FBR) is likely to reduce minimum tax rate from 1 percent to 0.5 percent for poultry sector under Section 113 of the Income Tax Ordinance 2001. Sources told Business Recorder here on Saturday that the FBR is examining the proposal of the poultry sector to reduce turnover tax from one to 0.5 percent.
The FBR is already in the process of reduction in the minimum tax rate from 1 percent to 0.5 percent under Section 113 of the Ordinance, 2001 for Pakistan International Airlines (PIA). In this connection, the FBR will issue a notification to give 50 percent reduction in the minimum tax of the national flag carrier to help it come out of the current financial crisis.
In the past, the federal government had reduced turnover tax from one percent to 0.5 percent for refineries, oil marketing companies (OMCs), gas companies and any category of taxpayer having annual turnover of over Rs 1 billion. The Board had also allowed 80 percent rebate on payment of turnover tax by the pharmaceutical distributors, distributors of fast moving consumer goods and distributors of fertilisers. However, these distributors The FBR had already reduced turnover tax from one to 0.5 percent for Sui Northern Gas Pipelines (SNGPL) and the Sui Southern Gas Company Limited (SSGC).
When contacted, tax experts said that the tax on declared turnover was chargeable in cases of companies declaring losses. Prior to budget 2010-11, this tax was chargeable @ 0.5 percent. In order to rationalise this levy vis-à-vis the taxes payable in corporate cases returning taxable incomes, rate of minimum tax for the cases returning losses was enhanced to one percent in budget 2010-11. Following increase in the rate of turnover tax, a number of sectors had approached the Board for reduction in the rate. Resultantly, the FBR had accepted the demands of different sectors from time to time and reduced the rate of the turnover tax from one to 0.5 percent.
The FBR had reportedly collected Rs 2.3 billion from increase in turnover tax from 0.5 to one percent through Finance Act 2010 against projected figure of Rs 6 billion during July-January (2010-2011), reflecting a shortfall of Rs 3.7 billion. The collection of turnover tax stood at Rs 0.5 billion during 2009-2010. However, the target of Rs 6 billion was not achieved keeping in view exemptions granted to different sectors from levy of one percent turnover tax. During 2010-2011, turnover tax was reduced from one percent to 0.5 percent for different sectors.