Mon. Sep 23rd, 2019

Battery industry demands to reduce sales tax

Aftab Ahmed

Islamabad:Local battery industry has urged the government to reduces general sales tax to help the ailing industry get back on its feet.

An official of industry said that announcement of uniform rate of sales tax will provide level playing field to all manufacturers, however, the rate of 17%, is too high. He added that the government should bring it down to 5 percent, as higher sales tax will enable lead suppliers, mostly in unorganized sector, claiming bogus sales tax input, thereby pocketing bulk of the sales tax

While praising Federal Board of Revenue (FBR) for announcing critical measures against tax evasion in the Federal Budget 2019-20, local battery industry has recommended few more steps in this regard.

According to the measures announced in Budget for FY2019-20, the battery manufacturers should now withhold 5% of gross value of supplies made by unregistered persons which will help eliminate malpractices in the industry like declaring huge purchases from unregistered persons to cover-up unlawful practice of receiving lead in exchange of supply of fresh batteries under barter arrangement.

Moreover, battery manufacturers who are selling batteries to dealers who are not registered in sales tax and are not in active income taxpayers’ list, will be penalized by adding 7.5% of the value of such sales to their income, which will help broaden the tax base and regulate the battery trade.

Furthermore, battery manufacturers will now be required to print retail price and sales tax on battery container and packing which will bring transparency in business.

Uniform sales tax has also been levied on all forms of lead (scrap batteries, reclaimed lead, antimonial lead and refined lead) to curb tax evasion, however, the rate has been fixed at 17 percent instead of reducing to 5 percent, as requested by the industry.

An official of the industry while praising the government on the measures announced in the budget for next fiscal, requested the government to consider some more steps to help the ailing industry get back on its feet. “Announcement of uniform rate of sales tax will provide level playing field to all manufacturers, however, the rate of 17%, is too high,” he said adding that the government should bring it down to 5 percent, as higher sales tax will enable lead suppliers, mostly in unorganized sector, claiming bogus sales tax input, thereby pocketing bulk of the sales tax collected from battery manufacturers.

He also said that increase in the rate of minimum tax from 1.25% to 1.50% is quite unfair because most of the battery manufacturers are incurring losses.

Moreover, he pointed out an anomaly in sales tax laws viz-a-viz income tax laws as under sales tax laws every registered person is required to provide details of domestic purchases in annexure A to sales tax return, which include particulars of supplier, such as Name, NTN, CNIC No. and invoice number but some companies in the battery industry are not furnishing this required information.

It is worth adding here that a similar issue in income tax has been very effectively addressed in Federal Budget 2019-20 imposing a fine or imprisonment for a term not exceeding one year or both, on non-furnishing or furnishing incomplete details in withholding tax statements.

“We suggest that similar provision shall also be added in sales tax laws, to help FBR to cross check the purchases declared in sales tax return with payments made and income tax deducted shown in income tax statement filed by manufacturers,” he added.

“The tax machinery has to be revamped and FBR will have to enhance its capacity and capability to proactively monitor compliance and achieve the desired results,” he concluded.

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *