LCCI BUDGET 2009-10 PROPOSAL
SEEKS CUT IN GST, UP IN IT TAX EXEMPTION LIMIT
Apr 20 - 26, 2009
The Lahore Chamber of Commerce and Industry (LCCI) has demanded of the government to bring down the prevailing rate of General Sales Tax from 16 per cent to 12 per cent.
In its budget proposal, the LCCI President Mian Muzaffar Ali, Senior Vice President Tahir Javaid Malik, Vice President Irfan Iqbal Sheikh and LCCI convener on Excise and Taxation Shahzad Azam Khan have asked the federal government to enhance Income Tax exemption limit to Rs 300,000 from Rs 100,000.
The Lahore Chamber of Commerce and Industry (LCCI) also called for cut in duty on raw materials and semi finished products to support and encourage export-oriented industries. It also urged the government to reduce withholding tax on cash withdrawal from banks to 0.2% and threshold be increased from Rs.25, 000 to Rs.50,000. The advance tax at the rate of 10 percent under section 235 shall not be charged from industrial consumers or those having final tax regime income. The refund claim of access amount deducted under this section should be allowed to every taxpayer as vested right.
In the budget proposals, LCCI emphasized that tax net should be widened. There should be audit on scientific basis and for automation and facilitation of the taxpayers "Unique Identification Number" (UIN) should be introduced for companies and firms and CNIC for individuals. Tax cards should be issued to distinguish the taxpayers & non-taxpayers. There should be consistency in policies like tax returns shall remain the same for five years; tax deduction statements should be submitted on quarterly basis instead of monthly statements. E-filling of returns shall not be made mandatory.
The principle of 'joint and several liability' in section 8A Sales tax Act, is not well defined and can be misused. For example, if a supplier has paid tax in full but somehow his buyer has become blacklisted, the supplier cannot be held responsible. However, apparently section 8A holds such a person responsible for any non-payment at subsequent stage. Therefore, this section shall be omitted from the statute.
When registration of a taxpayer is suspended due to any reason, its effect is retrospective, i.e. from the date of registration, the buyers of such blacklisted supplier are severely affected, and therefore proper measures shall be adopted to end the miseries of the genuine buyers.
Definition and implications of tax fraud shall be clearly defined to stop its usage to harass the taxpayers.
Special Excise Duty is creating undue burden and hardships for the return filers. It should be merged into Sales tax to reduce multiplicity of taxes.
Section 8-B of Sales tax shall be abolished while wholesalers, dealers and distributors are immediately registered; manufacturers are allowed registration after verification of physical premises. It is proposed that manufacturers may also be registered immediately.
Pharmaceutical sector is fulfilling local demands as well as earning precious foreign exchange for the country therefore Customs Duty on raw material of Life Saving Drugs should be reduced to 5% besides Sales Tax on Packing Material and Locally Manufactured Raw Material should be withdrawn. Moreover, it is proposed to withdraw the restrictions on import of pharmaceutical machinery, to promote BMR and new Pharmaceutical Industries in Pakistan. Withdrawal of 35% cash margin on bank L/C for import of pharmaceutical machinery is strongly recommended. Import duty on chemicals and dyes used in textile sector shall be reduced to make this industry more competitive in the international market.
Due to international recession, price of iron, steel and other metals has been drastically reduced but the custom department is valuing such materials on previously quoted high prices. Steel re-rolling sector may also be provided all utilities on rationalized rates to reduce the cost of business.
Steel scrap is the core raw material of steel melting industry. 50% scrap is collected through small scrap dealers and 50% is imported. Majority of local scrap dealers are not registered. In the budget 2009ñ10, it is proposed, 3.5% WHT should be deducted from the scrap suppliers. The scrap suppliers are not in the tax net hence steel-melting industry is liable to pay tax instead of scrap suppliers.
Therefore, it is proposed that this 3.5% WHT be abolished from the steel industry besides 10% WHT on electricity consumption in melting industry may also be removed. The steel sector is liable to pay sales tax at the rate of Rs.6 per unit of electricity which also should be rationalized in the current economic situation.
Steel prices are falling all over the world therefore, 25% duty on export of steel bars, ingots, and billets shall be withdrawn which was imposed in order to keep the steel prices in the country at reasonable levels. Government should carry out a detailed survey and shall include small furnaces in tax net. Poultry provides the essential nutrient proteins. Pakistan has become self-sufficient in production of poultry and its feed. It is proposed to allow duty free import of poultry medicine vaccines and all other inputs to support the poultry industry, which is jeopardized, by sporadic threats of bird flu and other fatal diseases in birds. The modern administrative and industrial efficiency depends on good information management, so it should be available on affordable prices therefore, 16% GST should be removed in the next budget 2009-10 from computer hardware industry and the same rate of duty and custom tariff and tax structure should be applied as was before June 2005.