LAHORE-The cement industry has proposed zone wise maximum retail price mechanism , as dynamics of every province and region is different in Pakistan therefore, collection of sales tax on the basis of single MRP across the country is difficult, forcing manufacturers to restrict their sales only to nearby markets.
All Pakistan Cement Manufacturers Association proposed step wise abolishment of FED, which amounts to Rs400 per ton, in order to encourage cement off-take.
In addition to this, cement industry is subjected to 17% GST, imposed on MRP instead of ex-factory, which is comparatively very high from the global rates.
As far as multiple withholdings/extra taxation on the supply chain, it said, responsibility of collection of withholding tax from the retailers 0.5% and wholesalers 0.1% has been imposed on cement manufacturers. Further, the wholesalers are also required to collect income tax 0.5% on sales made to the retailers. Thus a retailer receiving goods through wholesaler is subject to 0.1% more tax having negative impact on wholesale business.
Multiple and cross Withholding and collection of income and sales taxes has caused undue blockage of funds, excessive Works and extra documentation/reporting within industry and tax authorities. Taxes are blocked in the shape of refundable taxes, negatively affecting businesses and thus hurting the economy, he added.
APCMA has also suggested that the 50% rate of initial allowance on plant and machinery should be restored from the current 25% which in turn will result in gearing up investment in BMR and capacity enhancement of existing industries. It further proposed that withholding tax rate on import of raw materials, spare parts, stores and capital goods by industrial undertaking for its own use, be reduced from 5% to 1% as this initiative would strongly support the industrialization base against commercial importers.
Moreover, Withholding Tax on electricity bills should not be made from cement sector because most of the companies have to file for refunds of the tax.
In view of the high level of inflation, the limit of Rs50,000/ for a bank transaction under single account head under Clause (I) should be increased at least up to Rs250,000; and Rs15,000/ per month set for the payment of salary under Clause (I) of the Section 21 needs be increased up to Rs25,000.
APCMA opined that levying of 5% Workers’ Profit Participation Fund and 2% Workers’ Welfare Fund effectively means that the industry is being subjected to 41% corporate tax. Even though this was brought down from 42% to 41% through the last budget, i.e. a meager 1%, the rate is still nearly double of the Asian average of 22.50%.

Recommended zones:

Area         Zone         S.No

a. Sindh Province excluding upper Sindh     North     1
b. Balochistan Province excluding upper Baluchistan

a. kpk Province        South        2

b. Punjab Province

c. FATA

d. Upper Sindh including District upto Jacobabad, Shikarpure, Sukkur & Ghotki.

e. Upper Balochistan including District upto Qila Abdullah, Quetta, Sibbi, and Dera Murad Jamali.