LAHORE - The Federal Board of Revenue has started to charge 5.5% withholding tax on import of cotton instead of one per cent to manufactures under Section 148 of the Income Tax Ordinance.
The Federal Board of Revenue (FBR) had clarified vide order No. C.No. 1(7)WHT/2006 dated 1.1.2015 that for the beneficiaries of SRO1125(I)2011 dated 31.12.2011 tax deduction under Section 148 of the Income Tax Ordinance, 2001 will be one per cent of the import value. Industry sources said that the Customs officials at Karachi port have started freezing import/export accounts and pressing for recoveries on previous consignments without any show cause notice. This situation has panicked the industry at large. According to APTMA Chairman SM Tanveer, the productivity of textile industry would be adversely affected if these consignments remain stranded at the Karachi port for long. Furthermore, the textile industry exports would also be compromised in case the Karachi Customs kept freezing the import and export accounts for unjust recovery purposes, he added. He said the FBR should not target textile industry for revenue collection drive unjustly, as it is contrary to the FBR clarification. He urged the Federal Finance Minister Muhammad Ishaq Dar and Chairman FRB Tariq Bajwa to intervene immediately and issue directions to the Karachi Customs for charging one percent withholding tax, unfreezing the import/export accounts and withdrawing of unjust verbal recovery orders.
Further, he said, the FBR should issue direction to the concerned department for delinking of SRO1125 on WEBOC system to avoid wrongful charge of 5.5 percent withholding tax.