FBR urged to with­draw amend­ment in SRO 1125(I)/2011

The Pak Banker - - NATIONAL -

The La­hore Cham­ber of Com­merce & In­dus­try Wed­nes­day urged the Fed­eral Board of Rev­enue (FBR) to with­draw amend­ment in SRO 1125(I)/2011 dated 31.11.2011 through SRO 491(I)/2016 dated 30.06.2016, un­der which in­put tax credit or re­fund of pack­ing ma­te­rial of all sorts has been dis­al­lowed.

In a state­ment is­sued here, the LCCI Pres­i­dent Sheikh Muham­mad Ar­shad, Se­nior Vice Pres­i­dent Al­mas Hy­der and Vice Pres­i­dent Nasir Saeed said that this will have far reach­ing con­se­quences for the nas­cent pack­ag­ing in­dus­try es­tab­lished in the coun­try.

The LCCI of­fice-bear­ers said that most of the said pack­ag­ing in­dus­tries are sup­ply­ing pack­ing ma­te­rial to the ex­porters and are duly reg­is­tered for sales tax. They said that the de­nial of in­put tax/re­fund to ex­porters will en­cour­age them to make pur­chases from un-reg­is­tered per­sons so that only 1% tax is re­quired to be with­held, in­stead of mak­ing pur­chases from said reg­is­tered man­u­fac­tur­ers/sup­pli­ers who will charge sales tax @ 17%. They said that the busi­ness of reg­is­tered man­u­fac­tur­ers/sup­pli­ers of pack­ag­ing ma­te­rial will, there­fore, come to a stand­still and they will be forced ei­ther to close down or to de-reg­is­ter them­selves and go in the un-or­ga­nized sec­tor.

They said that the prob­lem will be ag­gra­vated in view of the fact that most of the large ex­porters/ex­ported houses will ob­tain DTRE for im­port or lo­cal pur­chase of var­i­ous items in­clud­ing pack­ing ma­te­rial. They will im­port pack­ing ma­te­rial free of cus­toms duty and sales tax un­der the said scheme and there will be no need for them to make pur­chases ei­ther from reg­is­tered sup­pli­ers or from un-reg­is­tered sup­pli­ers. They said that this will cause loss of lo­cal eco­nomic ac­tiv­ity re­sult­ing in huge rev­enue loss to the na­tional ex­che­quer.

"Even where the said ex­porters will make lo­cal pur­chases un­der the DTRE against zero rated in­voices, the man­u­fac­tur­ers/sup­pli­ers will be re­quired to seek re­fund of in­put tax for sup­ply against DTRE which may not in fact be avail­able un­der the amend­ing SRO 491(I)/2016. This will ul­ti­mately pile up huge amount of re­funds of SMEs which are al­ready work­ing with ev­ery lim­ited cap­i­tal of Rs. 10 to 20 mil­lion", the LCCI of­fice-bear- ers said.

They said that the above facts point to­wards one thing that reg­is­tered SMEs man­u­fac­tur­ing/sup­ply­ing pack­ing ma­te­rial to ex­porters will not be able to con­tinue their busi­nesses.

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