KCCI's Proposals For Federal Budget 2021-22 (Draft For Approval) FEB 20, 2021 With Annexure

KARACHI CHAMBER OF COMMERCE & INDUSTRY
PREAMBLE – PROPOSALS FOR FEDERAL BUDGET 2020-21

The year 2020 has been a watershed for economy and business not only in Pakistan but all over the world. Mankind is facing a seismic
change in how the global economy and international financial system will change fundamentally and adapt to new realities. Covid-19
pandemic has affected every country and every human being in a way that was never anticipated. Many businesses and industries
which flourished prior to pandemic, have failed and shut down while new businesses and industries have emerged which have taken
advantage of changing dynamics and needs of the mankind in view of the need to adapt to new realities. E-Commerce, Healthcare
and Pharma sectors are the greatest beneficiaries of Covid-19.
In a radically changed environment, the Government of Pakistan and policymakers have to bear these new realities and global
transformation in mind while working on Budgetary measures for the year 2021-22. Outdated economic policies, a stifling taxation
regime and antiquated and obstructionist administrative structure of FBR and its subordinate departments will only be counter-
productive for the economy if some drastic measures are not taken in the budget to rectify the flaws and discard the outdated revenue
models. The country and its economy need Out-of-Box solutions and not a budget in the usual age-old template which we see year
after year, followed by a plethora of SROs, Amendments, Rules, notifications and clarifications. Such practices over the years have
hampered growth and capped the true potential of entrepreneurs in Pakistan and resulted in rapid growth of undocumented economy
having a size larger than documented economy.
In this perspective, the Karachi Chamber of Commerce & Industry has compiled proposals for the Federal Budget 2021-2022 based on
recommendations and feedback from its members, representatives of major business sectors and senior advisers. Being a trade-body
representing the tax-payers contributing the major part of revenues to national exchequer, KCCI is acutely aware of ground realities
of trade and industry and well acquainted with both micro and macro issues faced by business community.
Therefore our proposals presented herewith for upcoming Budget for FY 2021-22 carry pivotal importance and will have a positive
impact on business and investment climate, ease of doing business and overall growth of economy. We hope these proposals will
receive due importance and will be incorporated in the Budget 2021-22.
M. SHARIQ VOHRA SAQIB GOODLUCK SHAMSUL-ISLAM KHAN MOHAMMAD IBRAHIM KASUMBI

President and Chairman- Senior Vice President Vice President Former Senior Vice President and
Budget Standing Committee Vice Chairman-Budget Standing Committee
KCCI’s PROPOSALS FOR FEDERAL BUDGET 2021-22
MAJOR ISSUES AND ANOMALIES
REVIVE SRO 1125 IN REAL IT IS IMPERATIVE TO REVIVE SRO 1125 IN ITS TRUE SPIRIT AND REINTRODUCE SYSTEM OF NO PAYMENT AND
NO REFUND OF SALES TAX FOR THE FIVE EXPORT ORIENTED SECTORS.
SPIRIT / RESTORE ZERO ALTHOUGH THE GOVERNMENT HAS STREAMLINED THE FASTER SYSTEM, NONETHELESS, THE EXPORTERS ARE
RATING OF SALES TAX FACING LIQUIDITY CRUNCH AMID CONDITION OF FILING CLAIMS ONLY AFTER DISPATCH OF SHIPMENT WHICH
TAKES AT LEAST THREE MONTHS TIME. CONSEQUENTLY, THE LIQUIDITY IS HELD-UP CAUSING FINANCIAL
PRESSURE ON EXPORTERS.
HIGH RATE OF SALES TAX RATE OF SALES TAX AT 17% IN PAKISTAN IS HIGHEST IN THE REGION. SUCH HIGH RATE OF SALES TAX IS A
DISINCENTIVE TO DOCUMENTATION AND COMPLIANCE. INDIRECT TAXES AT SUCH HIGH RATE AT SOURCE
17% SUPORTS SMUGGLING, EVASION, UNDER-INVOICING AND MIS-DECLARATION. RATE OF SALE TAX AT SOURCE
MAY THEREFORE BE REDUCED TO SINGLE DIGIT ON ALL SECTORS TO REDUCE COST OF INPUTS AND PROVIDE
SUPPORT TO REDUCE PRICES OF CONSUMER GOODS AS WELL AS THE COST OF EXPORTS.
CONDITION OF CNIC CNIC REQUIREMENT HAS PROMOTED CASH ECONOMY AND UNDOCUMENTED TRANSACTIONS. IT HAS DONE
MORE DAMAGE THAN BENEFIT. CNIC REQUIREMENT SHOULD BE OPTIONAL AND TREATED AS STRN, IF
PROVIDED IN RETURN BY REGISTERED PERSON.
WHT/MINIMUM TAX CONCEPT OF TREATING WHT AS MINIMUM TAX ON VARIOUS SECTORS AND REGISTERED PERSONS HAS
SERIOUSLY ERODED THE CREDIBILITY OF ENTIRE TAX REGIME. WHT SHOULD BE ADJUSTABLE AGAINST ACTUAL
TAX LIABILITY. CONVERTING WHT TO MINIMUM TAX IS AGAINST ALL FAIRNESS AND A HURDLE IN COMPLIANCE
FORCING MANY TO OPT OUT OF TAX REGIME.
FURTHER TAX 3% FURTHER TAX ON SALES TO UNREGISTERED PERSONS SHOULD BE REMOVED. IN CASE OF SALE OF RAW
MATERIALS TO UNREGISTERED UNITS, 1% VALUE ADDITION S.TAX MAY BE LEVIED TO RECOVER VAT UPTO
MANUFACTURING STAGE
MULTIPLE AUDITS MULTIPLE AUDITS UNDER VARIOUS SECTIONS OUTSIDE THE SCOPE OF COMPUTER BALLOTING U/S. 72 B, ARE
CONDUCTED RESULTING IN HARRASSMENT AND EXTORTION OF REGISTERED PERSONS. AUDIT PARAMETERS
KCCI’s Proposals for Federal Budget 2021-22 i

ARE KEPT SECRET WHICH VIOLATES THE RIGHT TO INFORMATION AND CAUSED TRUST DEFICITS. OVERLAPPING
PROVISIONS FOR AUDIT BE DELETED AND LAWS BE CONSOLIDATED UNDER ONE SECTION.
POST REFUND AUDITS EXCESSIVE DOCUMENTS ARE DEMANDED UNNECESSARILY IN THE NAME OF POST REFUND AUDIT, CREATING
UNNECESSARY HARDSHIP AND PAPERWORK WHICH IS ALREADY IN POSSESSION OF THE DEPARTMENT.
DOCUMENTS WHICH ARE ALREADY SUBMITTED SHOULD NOT BE REQUIRED IN THE NAME OF POST-REFUND
AUDIT.
FASTER-ERROR FASTER SYSTEM INCORRECTLY PROCESSED AND ISSUED RS.1/- RPOS AND THE FBR TRANSFERRED SUCH CLAIM
TO CONCERNED FIELD OFFICES (RTO/CTO/LTO). THIS IS PROCESS FURTHER DELAYS THE REFUNDS. THEREFORE
CORRECTION SUCH CASES SHOULD BE RE-PROCESSED ON FASTER SYSTEM INSTEAD OF TRANSFERRING TO RTO/CTO/LTO.
FASTER SYSTEM HAS TO BE IMPROVED TO FACILITATE THE TAX PAYERS AND DELAYS SHOULD BE AVOIDED.
3% VALUE ADDITION TAX 3% VALUE ADDITION SALES TAX HAS BEEN RE-IMPOSED ON COMMERCIAL IMPORT OF RAW MATERIALS. IN
FINANCE ACT’2020 VIDE AMENDMENT IN TWELFTH SCHEDULE TO SALES TAX ACT’1990 –UNDER HEADING
ON IMPORT OF RAW “PROCEDURE AND CONDITIONS”, IN CONDITION (2),
MATERIALS VALUE ADDITION S.TAX AT ON COMMERCIAL IMPORTERS OF RAW MATERIALS WAS REMOVED IN THE FINANCE
ACT’2019 AFTER LENGTHY DELIBERATIONS WITH FBR AND MINISTRY OF FINANCE FOR YEARS, BECAUSE
COMMERCIAL IMPORTERS DO NOT ADD ANY VALUE TO RAW MATERIALS AND SELL IT IN THE SAME FORM. SUCH
VALUE ADDITION OF 3% IS UNJUST AND AN ANOMALY UNDER THE LAW. IT SHOULD THEREFORE BE REMOVED,
AS FBR ITSELF HAD AGREED IN TAX MEASURES IN BUGET 2019-20.
SEC.140 ACCESS TO BANK SEC.140, ACCESS TO BANK ACCOUNTS FOR RECOVERY OF TAX FROM REGISTERED PERSONS. THIS PROVISION
AND FURTHER ACCESS TO INFORMATION ON BANK ACCOUNTS UNDER OTHER PROVISIONS OF LAW, HAVE BEEN
ACCOUNTS & RECOVERY COUNTER-PRODUCTIVE AND LED TO A FLOURISHING CASH ECONOMY. MANY INNOVATIVE WAYS HAVE BEEN
EVOLVED BY BUSINESSES SIMILAR TO BLOCK-CHAIN AND A LOCAL HUNDI SYSTEM. MOST TRANSACTIONS ARE
TAKING PLACE OUTSIDE BANKING CHANNELS. THE PROVISION SHOULD BE REMOVED OR AMENDED TO
RESTRICT ACCESS AND ARBITRARY RECOVERY FROM BANK ACCOUNTS.
WHT 4% TO 4.5% ON LOCAL WHT @4.0% TO 4.5% OF GROSS INVOICE VALUE IS DEDUCTED ON SUPPLY OF GOODS BY FILER COMPANIES AND
REGISTERED PERSONS RESPECTIVELY.
SUPPLIES BUYERS AND MIDDLEMAN DEMAND IMPORTER/MANUFACTURER TO ISSUE INVOICE DIRECTLY IN THE NAME OF
ULTIMATE BUYER TO AVOID THIS HARSH AND EXCESSIVE TAX. RATE OF 4.0% TO 4.5% WHT U/S 153(A) IS VERY
HIGH. IT MAY BE REDUCED TO 1% FOR FILERS AND IT MAY BE ADJUSTABLE. WHT SHOULD BE DISTRIBUTED
ACROSS THE SUPPLY CHAIN AND 1% MAY BE RECOVERED AT EACH STAGE.
SMUGGLING OF BLACK TEA CONSUMPTION OF BLACK TEA IN PAKISTAN IS 240,000 TONS, BUT THE IMPORTS THROUGH LEGAL CHANNELS IS
HARDLY 100,000 TONS DUE TO HIGH RATES OF CUSTOMS DUTY, SALES TAX, R.D. AND WHT. REMAINING
DUE TO HIGH TARIFFS REQUIREMENT FILLED BY SMUGGLING, ATT, AND IMPORTS UNDER VARIOUS EXEMPTIONS/CONCESSIONS
GRANTED TO PATA AND AZAD KASHMIR WHICH CONDUCT 90% OF OFFICIAL IMPORTS. RATES OF CUSTOMS
DUTY, SALES TAX, RD & WHT MAY BE RATIONALIZED TO PREVENT SMUGGLING AND MASSIVE LEAKAGE OF
REVENUE. (PLS DETAILED PROPOSAL)
KCCI’s Proposals for Federal Budget 2021-22 ii

KCCI’s PROPOSALS FOR FEDERAL BUDGET 2021-22
ISSUE NO. TABLE OF CONTENTS PAGE
1 SALES TAX 1
1.1 SALES TAX – POLICY RELATED 1
1 REVIVE SRO 1125 IN REAL SPIRIT / RESTORE ZERO RATING OF SALES TAX 2
2 CNIC - UNREGISTERED PERSONS 3
3 RAW MATERIAL SALES TO UNREGISTERED UNITS - 3% FURTHER TAX 4
4 HIGH RATE OF SALES TAX 17% 4
5 FURNITURE SHOPS AND WORKSHOPS WRONGLY TREATED AS TIER-1 RETAILERS 5
6 SALES TAX ACT SIXTH SCHEDULE SERIAL NO. 52 A 6
7 DISCREPANCY IN SALES TAX REFUND ON FASTER 6
8 INPUT TAX DISALLOWED IN SALES TAX RETURN 6
9 DISCREPANCIES POINTED OUT IN “SALES TAX REGISTRATION” 7
10 MISUSE OF POWERS UNDER SEC.38B: RAIDS AND SURPRISE INSPECTIONS BY FBR & I,I & P PERSONNEL 7
11 NON FILING OF RETURN 8
12 SRO NO. 98(I)/2021 8
13 ABSOLUTE MONOPOLY OF AUTO ASSEMBLERS ON DUE TO DECADES OF PROTECTION / CONCESSIONS 9
1.2 SALES TAX – PROCEDURAL RELATED 10

14 SALES TAX RETURN REVISION – RULE – 14A 11
KCCI’s Proposals for Federal Budget 2021-22

15 DISCREPANCIES POINTED OUT IN SALES TAX AUDIT 11
TH
16 PROPOSED AMENDMENTS IN THE 8 SCHEDULE OF SALES TAX ACT 1990 12
17 DISCREPANCIES POINTED OUT IN TRANSFER OF JURISDICTIONS OF TAXPAYERS 12
18 DISCREPANCIES IN SALES TAX REFUND ON FASTER KEPZ SHIPPING BILLS NOT VERIFIED 13
19 DIFFICULTIES FOR TIME LIMITATION OF FILLING OF ANNEX-H 13
20 PROVINCIAL SALES TAX DATA INTEGRATION 13
21 DISCREPANCY IN SALES TAX RETURN AT ANNEX-B 14
22 ANNEX F 14
EXPORTERS SHOULD BE ALLOWED REFUNDS OR AT LEAST ADJUSTMENT UNDER SUB-SECTION 7 OF
23 14
SECTION 3 OF ELEVENTH SCHEDULE OF SALES TAX ACT 1990
24 SECTION 26 (3) OF SALES TAX ACT 1990 15
1.3 SALES TAX – TAXATION RATES RELATED 16
25 CHANGES SALES TAX RATES 17
26 RAW MATERIAL IMPORTS - 3% VALUE ADDED SALES TAX 18
26 SALES TAX ON MEDICAL DEVICES 19
27 SALES TAX ON DAIRY PRODUCTS 19
1.4 SALES TAX – LEGISLATION RELATED 20

28 SECTION 25: SALES TAX AUDIT U/S 25 (2) & SECTION 72B (1A) 21
29 SECTION 37 21
30 PROPOSED AMENDMENTS IN SALES TAX SRO 21
2 INCOME TAX 22
2.1 INCOME TAX – POLICY RELATED 22
31 BURDEN AND MULTIPLICITY OF TAXES OVER ALREADY REGISTERED TAXPAYERS & FILERS 23
32 EXEMPTION OF WHT PAYMENT FOR EXPORTERS UNDER FTR REGIME U/S 154(3B) 23
33 DISTORTIONS IN WITH-HOLDING TAX REGIME 24
34 ACCESS TO BANK ACCOUNTS AND TRANSACTIONS OF TAX-PAYERS SEC.140 AND NEW PROVISIONS 56 AB 25

35 DISPARITY IN WHT ON MANUFACTURERS & COMMERCIAL IMPORTERS OF YARN 25
36 WHT 4.0% TO 4.5% ON GROSS INVOICE VALUE DEDUCTED ON LOCAL SUPPLIES 26
AMENDMENT IN SEC 148. CHANGE FROM WHT TO MINIMUM TAX FOR COMMERCIAL IMPORTERS OF RAW
37 26
MATERIALS
38 MEDIUM DENSITY FIBRE BOARD (MDF) – DOMESTIC INDUSTRY PARALYSED BY IMPORTS 27
AUDITS U/S 177 (4), 177 (7), 177 (11), 122 (5A) etc. OUTSIDE THE SCOPE OF COMPUTER SELECTION.
39 28
REPEAT AND MULTIPLE AUDITS (UNDER 177(7)
40 TAX CREDIT FOR INVESTMENT UNDER SECTION – 65B OF THE ORDINANCE 29
41 UNJUST APPLICATION OF WHT u/s. 236 G & H OF THE ORDINANCE MANUFACTURERS OF FMCGs 29
42 EXCLUSION ON REQUIREMENT OF CNIC FOR DISTRIBUTORS ON SALES OF RS.100,000/- 30
2.2 INCOME TAX – PROCEDURAL RELATED 31
43 SIMPLIFICATION OF INCOME TAX RETURN FORM 32
44 ANOMALY IN PCT CODE OF FERTILIZER /MANURE SPREADER S.NO.91 (SCHEDULE II, PART IV) 32
45 PROPOSALS-DISTRIBUTORS OF CIGARETTES AND FMCG 33
46 TAXPAYER FOLDER ON FBR E-PORTAL 34
2.3 INCOME TAX – TAXATION RATES RELATED 35
47 TAX OVER TAX U/S.153 36
48 INCOME TAX ON TURNOVER @ 1.5% ON AUTO-PART DEALERS 36
49 ANOMALY IN TARIFF ON UNCOATED PAPER 36
50 ANOMALY IN TURNOVER TAX ON TRADERS OF COTTON YARN 37
51 SALES TAX ON INDUSTRIAL MACHINERY 37
52 HIGH RATE OF WHT ON MEDICAL DEVICES 38
53 FIRST SCHEDULE TAX ON NET INCOME 38
54 WHT ON DISTRIBUTORS OF CIGARETTE AND FMCG 38
2.4 INCOME TAX – LEGISLATION RELATED 39
55 POWERS TO SELECT AUDIT CASES U/S. 177 AND 214C 40
56 STAY OF RECOVERY BY COMMISSIONER (APPEALS) UNDER SECTION 128 (1A) OF ITO 2001 40
STAY OF RECOVERY BY APPELLATE TRIBUNAL UNDER SECTION 131(5) OF THE INCOME TAX ORDINANCE
57 41
2001

58 TIME LIMIT PROVIDED IN SECTION 161 OF THE ITO FOR MONITORING OF WITHHOLDING TAXES 41
3 CUSTOMS 42
59 SRO 327 EXPORT ORIENTED UNITS 43
DUTY & TAX REMISSION FOR EXPORTERS (DTRE): GARMENT STITCHING UNITS MANUFACTURERS-CUM-
60 44
EXPORTERS WHO DO NOT HAVE COMPOSITE UNITS BE ALLOWED FACILITATION UNDER DTRE SCHEME
61 DUTY ON IMPORT / EXPORT OF COTTON YARN 45
62 HIGH TARIFF RATES ON IMPORT OF FOOD AND CONSUMER ITEMS 45
63 ANOMALIES AND TAXES AND CUSTOMS DUTY REGIME ON BLACK TEA CAUSING MASSIVE SMUGGLING 46
64 EXCESSIVE CUSTOM DUTIES ON IMPORT OF EMPTY ALUMINUM BEVERAGE CANS 46
INCLUSION OF AUTOMOBILE AND MOTORCYCLE SPARE PARTS IN THIRD SCHEDULE – REQUIREMENT OF
65 47
MRP
66 PAPER AND PAPER BOARD-ANOMALIES 48
ADDITION OF OPTICAL FIBER CABLES (PCT NO. 8544.7000) AND TELEPHONE CABLES (PCT NO. 8544.4910)
67 48
IN SRO 211(1)/2009, DATED 05-03-2009, SCHEDULE XXIV, FOR REPAYMENT OF CUSTOMS DUTIES
68 REVIEW OF TARIFF RATES FOR DOMESTIC CABLE AND OPTIC FIBRE CABLES INDUSTRY 49
NO ADJUSTMENT ON IMPORTS OF RAW MATERIALS BY INDUSTRIAL UNDERTAKING FOR MANUFACTURING
69 50
OF OPTICAL FIBER CABLE
70 HIGH RATES OF DUTY AND SALES TAX ON SODIUM METABISULPHITE 51
71 HIGH TARIFFS ON SODIUM HYDROGEN SULPHITE H.S. 2832.1010 51
72 HIGH RATES OF C.DUTY AND TAXES ON FORMIC ACID 51
73 CHANGES IN CUSTOMS ACT 52
4 FEDERAL EXCISE DUTY 53

74 DUAL TAXATION ON BEVERAGES 54
75 FED ON BEVERAGES / CONCENTRATE 54
76 FED ON RETAIL PRODUCTS 55
77 FED ON FRUIT JUICES 55
5 ANNEXURE (CUSTOMS RELATED) 56

1 - SALES TAX
1.1 SALES TAX – POLICY RELATED
KCCI’s Proposals for Federal Budget 2021-22 1

REVIVE SRO 1125 IN REAL SPIRIT / RESTORE ZERO RATING OF SALES TAX
In the Budget 2019-2020, the Federal Government rescinded SRO1125 and imposed 17% Sales Tax on erstwhile Five Zero-Rated
ISSUE Export Sectors and exporters are required to apply for refund after export of consignment.
It is observed that the exporters who have filed their refund claims to date have received 35% of claims payment only while 65% of
the refund claims are stuck up with the Government which is approximately 12% amount of exporter's running capital. However,
the profit margin of exporters is around 5% to 8%. Moreover, exporter can apply for refund only after export of consignment. In this
manner their liquidity is stuck. Likewise, the exporters make purchases for production of export products at least six months in
advance which is consumed based on export orders causing financial hardships.
City Wise Textile Exports of Pakistan
2017-18 July - December 2020 % Change of
City No. of Export % of Textile No. of Export % of Textile Companies 2017-18
Companies (in US $ Millions) Exports Companies (in US $ Millions) Exports Over July-Dec 2020
OUTCOME Karachi 1808 6,887.33 50.06 1234 4,313.94 52.14 -31.75
Lahore 963 3,224.24 23.44 568 1,506.15 18.2 -41.02
Faisalabad 711 2,450.48 17.81 487 1,349.00 16.3 -31.5
Sialkot 2960 584.32 4.25 2156 707.21 8.55 -27.16
Others* 375 611.39 4.44 270 397.93 4.81 -28
Textile Exports 6817 13,757.77 100 4715 8,274.23 100 -30.83
Number of Textile Exports Companies were 6817 in 2017-18 which has been reduced to 4715 (-30.83%) in 2020-21 after imposing 17%
Sales Tax. Maximum numbers of Small Scale Exports Units have been wounded up their businesses in the country, causing huge number of
unemployment.
* (Bahawalpur, Abbottabad, Gujranwala, Gujrat, Multan, Peshawar, Kasur, Quetta, Rawalpindi, Sargodha, Sheikhupura, Thal)
It is imperative to revive SRO 1125 in its true spirit and reintroduce system of No Payment and No Refund of Sales Tax for the Five
Export Oriented Sectors.
PROPOSAL Although the Government has streamlined the FASTER system, nonetheless, the exporters are facing liquidity crunch amid condition
of filing claims only after dispatch of shipment which takes at least three months time. Consequently, the liquidity is held-up causing
financial pressure on exporters.
- Government must consider to restore and revive Zero-Rating under SRO1125 in real spirit or consider reduction in rate of Sales
Tax from current 17% to 5% to facilitate the exports ensuring availability of required/ adequate liquidity and smooth Cash flow,
BENEFIT to boost the confidence of Exporters to enhance their exports and cement their business ties with the foreign counterparts to
capture true business potential.

CNIC - UNREGISTERED PERSONS
By amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, and addition of 10th Schedule, it is mandatory to provide CNIC
number of Unregistered person in the invoice. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to ITO and
ISSUE Sec.156A of Customs Act.
Moreover 3% Further Tax is also charged on sales to unregistered buyers even if the CNIC number is provided, which is totally unjust
and tantamount to penalizing the registered persons who have to bear the burden of 3% Further Tax.
Rather than generating more revenue, this provision has resulted in proliferation of undocumented cash transactions.
With hardly 45000 registered entities in Sales Tax Regime, it is very hard to find a registered buyer. This has affected the entire supply
OUTCOME chain including manufacturers, importers and traders in Documented Sector and has led to greater advantage for smugglers and
undocumented sectors as they do not have to face any such condition. Many registered person are now forced to issue flying invoices
to registered persons to overcome CNIC condition and avoid 3% Further Tax.
1. Requirement of CNIC should not be mandatory till the time that number of registered persons in Sales Tax regime has substantially
increased. Providing CNIC number should be optional and may be treated at par with STRN if provided in the Sales Tax Return.
PROPOSAL2. Further Tax on supplies to unregistered buyer should not be charged if CNIC number is provided in Sales Tax Return.
3. In case CNIC number of unregistered buyer of Raw Materials is not provided, VAT may be charged at 1.7% on sellers of Raw Material.
 Discourage cash economy and encourage documentation by placing the trust in registered persons.
 Placing the responsibility to broaden the tax base squarely on RTOs and LTUs rather than on taxpayers.
BENEFIT
 Discourage Fake and Flying invoices which are issued to avoid 3% further tax.
 Enhance business transactions through banking channels and promote growth.

RAW MATERIAL SALES TO UNREGISTERED UNITS - 3% FURTHER TAX
Further Tax of 3% is charged on sales of Raw Material by commercial importers to unregistered buyers. Since a large number of small
ISSUE industries are unregistered, it is not possible to issue Sales Tax Invoice to them. To avoid 3% further Tax, the commercial importers
issue flying invoices to registered industries who can claim input of 17% + 3% against their Sales Tax liability on value addition.
This input Sales Tax of 17% and VAT 3% will otherwise go to exchequer without any adjustment or refund claim if the Further Tax of
OUTCOME 3% is withdrawn. Such invoices are also used to claim refunds. It is in fact a loss both to the exchequer and commercial importers.
1. Further Tax of 3% may be withdrawn on Sales of raw material by commercial importers to unregistered buyers
PROPOSAL 2. Commercial importers may be charged 1.7% Value Addition Tax on Sales of raw material to unregistered units, instead of charging
3% Further Tax.
This measure will revive Commercial Imports of Raw Material and prevent leakage of Revenue to the tune of Rs.35.0 Billion. (Total
import of Raw Material is Rs.3200.0 Billion in Pakistan and incidence of taxes is about 32% on commercial imports of Raw material).
BENEFIT Commercial importers are integral part of supply chain and indirectly support and Finance SMEs which contribute 35% to GDP and
the largest employer for skilled and unskilled manpower.
HIGH RATE OF SALES TAX 17%

Rate of Sales Tax at 17% in Pakistan is among the highest in the Region. Realistically such high rate of Sales Tax is in fact a disincentive to
ISSUE documentation and compliance.
Mostly the indirect taxes at such high rate at source encourage smuggling, evasion, under-invoicing and mis-declaration. It has been
OUTCOME a disincentive to documentation of supply chain and has only burdened a narrow base of registered manufacturers, importers and
traders.
Rate of Sale Tax may therefore be reduced to Single Digit on all sectors to reduce cost of inputs and provide support to reduce prices
PROPOSAL of consumer goods as well as the cost of exports.
Industry / economy will be boost up, raise in the tax base, promote the documented & registered economy, and will generate
BENEFIT revenue with growth. Smuggling, under-invoicing and mis-declaration will be curtailed. Fake and Flying invoices eliminated.

FURNITURE SHOPS AND WORKSHOPS WRONGLY TREATED AS TIER-1 RETAILERS
Furniture industry in Pakistan mainly comprises work-shops employing artisans and manual labor, except the few entities which
ISSUE import and resell modular furniture to retailers on a larger scale. Tax authorities and field officers in many parts of Pakistan are
issuing notices to the furniture shops and work-shops to register as Tier 1 retailers which is unjust and not practicable for this trade.
Furniture Shops do not fulfill the criteria defined under Sec.2, Sub-Sec.43A of Sales Tax Act’1990 because :
1. Furniture does not fall in Category of Fast Moving Consumer Goods (FMCG).
2. Furniture Shops/Showrooms are only for the purpose of display of bulky pieces of furniture and to get orders from
customers, rather than retail sale. The display requires area larger than 1000 feet and an anomaly is created under the Sub-
OUTCOME Section 43A which wrongly classifies such shops/showrooms as Tier 1 Retailer.
3. With rapid increase in rates of Electricity, the amount of Twelve Hundred Thousand in a year for commercial establishment
should not be made a condition to qualify as Tier 1 retailer.
4. Under Definition of Cottage Industry (5AB), the amount of turnover of Rs.3.0 Million is very unrealistic. Such cottage industry
cannot employ 10 persons or earn a profit of even Rs.25000/- per month after paying for materials, labor and overheads.
a. Furniture shops/showrooms and workshops which are not part of national or international chain of Stores and not located
in an airconditioned Mall, should be excluded from the scope of Sec.2 (Sub.Sec.43A)
b. All such furniture shops and work-shops may be included in Cottage Industry.(5AB) or treated as SMEs.
PROPOSAL c. Amount of Turnover as defined under 5AB should be enhanced to Rs.50.0 Million.
d. Minimum covered area defined for inclusion in Tier 1 for a furniture showroom/shop does not have relevance in Furniture
business as it does not reflect the volume of sales or turnover and therefore should not be the parameter to determine the
Tier of retailer
1. Stop harassment of shop-keepers, show room and work shop owners in the name of registration in Tier-1.
2. Protect the employment of hundreds of thousands skilled workers artisans and laborers.
BENEFIT
3. Preserve the industry of traditional hand-crafted furniture spread all over the country.

SALES TAX ACT SIXTH SCHEDULE SERIAL NO. 52 A
Goods supplied to Hospital run by the Federal or Provincial Governments or Charitable operating hospitals of 50 beds or more or
ISSUE the teaching hospitals of statutory universities of 200 or more beds.
Sales Tax is payable at the Import Stage for the Medical Devices. However, when supplying Medical Devices to the Government
OUTCOME Hospitals, Charitable Hospitals and Medical University related hospitals then Sales Tax exempted. Therefore, the sales tax paid at
import stage cannot be charged from such hospitals as input.
It is suggested that the Sales Tax on Medical Devices should be completely exempted. The proposal may be considered on
PROPOSAL humanitarian ground.
BENEFIT This allows product availability at the economical price to the patients.
DISCREPANCY IN SALES TAX REFUND ON FASTER
ISSUE Deferred refund claims are referred to concerned offices (RTO/CTO/LTO) for processing which delays the refund.
Procedure which stipulates deferred or missing refunds to be processed by RTO, CTO & LTO create hardship for exporters and causes
OUTCOME undue delays.
PROPOSAL It is proposed that all types of refunds should be processed through FASTER system i.e. one stage rather than multiple stages.
BENEFIT Prevent undue delays in refund and better utilization of FASTER system.
INPUT TAX DISALLOWED IN SALES TAX RETURN
ISSUE Some purchase invoices (input tax) are disallowed because the seller has not filed his sales tax return
OUTCOME This causes the buyer to face hardship by way of disallowance of input tax, although he paid the sales tax on purchases
PROPOSAL This flaw in the system should be removed by amending the mechanism to feed in sales tax return portal through additional checks
BENEFIT Taxpayer should not be deprived of its input tax

DISCREPANCIES POINTED OUT IN “SALES TAX REGISTRATION”
No option is available in IRIS registration 181-form to declare “Commercial Exporter / Importer” as principal activity.
ISSUE Addition of business principal activity as Manufacturer is very complicated.
Principals and business activities are in the same place in the IRIS 181-Form creating confusion.
Due to the flaws in IRIS 181-Form, Commercial Exporters/Importers have to pick the option of “WHOLESALER” as principal activity
which is incorrect.
OUTCOME Because of the lengthy and complicated procedure taxpayer cannot specify themselves as Manufacturer.
Due to no provision of separation between Importer and Manufacturers, taxpayers in both activities face a lot of problems.
Comprehensive range of activities should be provided as options to specify clear business principal activity in IRIS 181-Form.
PROPOSAL Concerned Association should issue a certificate and FBR/Board may change the taxpayer status as Manufacturer.
Option required to be available in the system of registration so there would no fear of error during registration.
Taxpayer can easily start his business without any delay and unnecessary hassle.
BENEFIT Taxpayer profile will become well defined and clear.
MISUSE OF POWERS UNDER SEC.38B: RAIDS AND SURPRISE INSPECTIONS BY FBR & I,I & P PERSONNEL
ISSUE FBR & I,I&P personnel, Special Sales Tax Cell to harass taxpayers conduct raids and surprise inspections by misuse of powers U/S.38B.
Such raids and surprise inspections of compliant/registered taxpayers premises without any prior notices or intimations, only harass tax
OUTCOME payers and open doors for heavy under table money or bribes leading to heavy corruption. Besides it works as deterrent for other to be
documented and register in Sales Tax or Income Tax.
Such departments or cells should only focus on unregistered persons engaged having undeclared assets and undocumented business
activities of high volume and register them in the tax net. rather than raiding, inspecting or sending notices to already registered persons
who burdened with numerous amounts of taxes and complying with taxation rules and procedures.
PROPOSAL This powers under Section 38B should be withdrawn or amended to only for broadening of tax base. Uneven and flawed Tax structure of
Sales Tax, Value Added Sales Tax and Further Tax are the root cause of problems and should be reformed in way that compliance for
registered persons is easier and raids are not required.
Prevent harassment of compliant tax-payers.
BENEFIT Broaden Tax base and eliminate corruption.

NON FILING OF RETURN
ISSUE NON Filing of return

Department reacts immediately and issues Show Cause Notice for penal action as well proceeded for suspension of registration at
OUTCOME the very first instance of non-filing.
On non-filing of return department should only exercise power to suspend Registration at tax payer fails to file return for six
PROPOSAL consecutive tax periods and issue Show Cause Notice.
BENEFIT Unnecessary litigation be reduced
SRO NO. 98(I)/2021

SRO.98(I)/2021 Dated 26.01.2021, Local Industry allowed to take 100% Input Tax Credit, exempted from 10% of Sales Tax every month,
ISSUE 8B of Sales Tax Act 1990.
As per SRO.98 (I)/2021, sales tax registered manufacturing companies of cold rolled, GI or coated coils/sheets which are listed in Pakistan
Stock Exchange shall be allowed to take 100% tax adjustment on their monthly sales tax return, earlier they were only allowed 90%
adjustment as for all registered persons, however other manufacturing entities or wholesalers not listed on PSX who import same items
OUTCOME are not allowed 100% adjustment.
Ironically the powerful lobbies in Pakistan get away with concessions and SMEs which need support are marginalized to the extent the
some are eliminated. The SRO culture flourishes and discriminatory treatment has led to misuse of benefit.
This SRO should be rescinded and 100% adjust of input tax paid at import stage should be allowed to all categories of importers of same
raw materials. Hot Rolled Coils are basic raw materials and further produce Cold Rolled, Galvanized and other coated products, by both
large and small industries. Commercial importers generally supply the raw materials to SME sector employing large number of workers.
PROPOSAL Value addition of 3% charged at import stage from commercial importers is also unjust while producers only pay 1.7%. Commercial
importers sell the material without change in form yet have to pay 3% VAT which should be withdrawn.
The listed large producers are already exempted from Regulatory Duties of up to 11% and 3% value addition tax at import stage. To allow
100% adjustment while only 90% adjustment to importers only is discriminatory and counter-productive.
1. Provide a level playing field to SMEs and discourage monopolization of an important market due to tax advantages.
BENEFIT 2. Prevent revenue losses due to unjustified concessions to conglomerates.

ABSOLUTE MONOPOLY OF AUTO ASSEMBLERS ON DUE TO DECADES OF PROTECTION / CONCESSIONS
1. In the last 40 (Forty) years, assemblers of automobiles have enjoyed protective duties, exemptions and virtual monopoly in Pakistan’s
automobile car market.
2. Contrary to initial agreements, the assemblers failed to implement deletion program up to 90%. Instead, they are importing CKD while
they have created vendors who mostly import auto parts and supply to these assemblers. Consequently, the so called vendor industry is
ISSUE only producing low quality and non-mechanical parts which is clearly visible in locally assembled cars.
3. So far the assemblers have only drained Pakistan’s foreign exchange reserves to the tune of billions of dollars.
4. Quality of automobiles produced by the assemblers is so poor that not a single unit of these cars has ever been exported to any country.
Despite such poor quality, artificial shortage is created to fetch a PREMIUM on the early delivery and allow undocumented investors to
exploit genuine buyers. `
Import of reconditioned cars more than 3 years old model has been restricted to favor the assemblers and exploit the middle class people of
Pakistan who can no more afford to buy even a small 660cc to 1000cc imported or local car. Ironically, import of brand new cars of high capacity
and premium brands is allowed which only benefits the elite. Middle class consumers have been deprived of their right to purchase a reasonably
OUTCOME priced used/reconditioned car which have a better quality and safety standard than the locally assembled new vehicles.
Clearly there is an element of corruption, connivance and vested interest involved in formulating auto-policies. Unfortunately, the vested
interest is also resisting to change the policy to allow import of reconditioned cars by reducing the Tariff rates and also permit import of cars of
up to five (5) year old models.
We believe more than enough protection has been given for decades to assemblers. We propose following changes in Tariffs for import of used
and reconditioned automobiles:
1. COMMERCIAL IMPORT OF USED AND RECONDITION CARS OF MODELS UPTO 5 YEARS OLD SHOULD BE ALLOWED.
2. TARIFF RATES FOR IMPORT OF USED AND RECONDITIONED CARS IS PROPOSED AS FOLLOWS
3. DEPRECIATION SHOULD BE RESTORED TO 50% AND AGE LIMIT TO BE INCREASED TO 5 YEARS.
CUSTOMS DUTY REGULATORY FED SALE TEX INCOME TEX
CAPACTIY
CURRENT PROPOSED CURRENT PROPOSED CURRENT PROPOSED CURRENT PROPOSED CURRENT PROPOSED
PROPOSAL UPTO 800 CC 50% 25% NIL 0 NIL 0 17% 17% 11% 5.50%
801 TO 1000CC 55% 27.50% NIL 0 NIL 0 17% 17% 11% 5.50%
1001 TO 1300CC 60% 30% NIL 0 NIL 0 17% 17% 11% 5.50%
1301 TO 1500CC 60% 30% NIL 0 NIL 0 17% 17% 11% 5.50%
1501 TO 1600CC 75% 37.50% NIL 0 NIL 0 17% 17% 11% 5.50%
1601 TO 1800CC 75% 37.50% NIL 0 NIL 0 17% 17% 11% 5.50%
1800 TO 2500CC 100% 50% NIL 0 20% 0 17% 17% 11% 5.50%
2500 above 100% 50% 70% 0 25% 0 17% 17% 11% 5.50%
3000CC 100% 50% 70% 0 30% 0 17% 17% 11% 5.50%

1.2 SALES TAX – PROCEDURAL RELATED

SALES TAX RETURN REVISION – RULE – 14A
SALES TAX RETURN REVISION – RULE – 14A & Section 26(3) Despite being allowed under Clause 26(3), Tax Payers are still required
ISSUE
to get CIR’s approval for return revision.
Approval of Commissioner Inland Revenue (CIR) is required to revise return even in cases where revision is applied within 60days
OUTCOME
and the amount of tax liability is not reduced.
Sec. 26(3) should be applied completely and e-filing system should be updated to automatically to reopen revision in case its applied
PROPOSAL
within 60 days of return filing.
BENEFIT Inconvenience, discrepancies and harassment to tax payer will be avoided.
DISCREPANCIES POINTED OUT IN SALES TAX AUDIT
ISSUE Excessive documents are demanded unnecessarily in the name of Post Refund Audit
OUTCOME Taxpayers remain under pressure for submission of huge volume of records, which taxpayers had already submitted to department
No record be required in case of post refund audit as department is already in possession of all necessary documents submitted by
PROPOSAL tax-payer.
BENEFIT Ease of doing business for exporters which enables them to focus on their business instead of collecting documents.

PROPOSED AMENDMENTS IN THE 8TH SCHEDULE OF SALES TAX ACT 1990
1. In 8th Schedule Table 1. S.No.15 it still shows PCT code 2309.9010, 2309.9020 and 2309.9090.
2. In 8th Schedule Table 1. S.No.15 it is mentioned as 2308.9000.
ISSUE 3. In 8th Schedule Table 1. S.No.15 PCT code for Rice Bran is mentioned as 2302.2000
4. In 8th Schedule Table 1. S. No. 15 PCT code 2306.7000 is given for Oil cake & other residues of Maize (corn) germ.
5. In S. No. 55 Table 1 of 8th Schedule of Sales Tax the Rate of Sales Tax is 5% for Fish Babies/ Seedlings.
1. In order to reflect updated PCT codes it should be changed to 2309.9000.
PROPOSAL3. In order to reflect updated PCT codes it should be changed to 2302.4000.
5. Fish Babies/ Seedlings should be exempted from whole of sales tax
1. In 1ST Schedule of Custom Tariff there is only one PCT code i.e. 2309.9000.
2. In 1st Schedule of Custom Tariff PCT 2308.0000 is mentioned as one heading.
3. In 1st Schedule Custom Tariff PCT 2302.2000 is not shown and Rice bran is covered under PCT code 2302.4000 & 2309.9000
BENEFIT 4. Previous PCT code for routers was 8517.6930 but in the year 2017-2018 after the transposition of tariff and the PCT code for routers
is 8517.6270 is substituted. In order to grant the benefit of SRO.483(I)/2008 Dated 28 th May 2008, the updated PCT code for Serial
1(e) of Table of SRO 483 may be substituted.
5. Fish Babies/ Seedlings may be zero rated/ exempted from whole of sales tax to promote exports of fishing industry.
DISCREPANCIES POINTED OUT IN TRANSFER OF JURISDICTIONS OF TAXPAYERS
FBR has created new LTOs which deal with taxpayers having a turnover of Rs.1.0 Billion or more.
ISSUE FBR has changed the taxpayer's jurisdictions abruptly without any intimation.
Jurisdiction of some tax payers has been transferred from LTO to CTO despite having a turnover of Rs.7.0 to Rs.8.0 Billion which has
OUTCOME created a great deal of confusion and hardship. Difficulties in transfer of soft data/hard copies of tax records from one jurisdiction
to other has created problem in processing of refunds and other issues.
Correctly and transparently implement the said policy.
PROPOSAL Transfer of Jurisdiction should be streamlined and made easier with prior intimation and valid reasoning.
Taxpayer data will be available for longer period to be checked by himself at one place.
BENEFIT Facilitate tax payers.

DISCREPANCIES IN SALES TAX REFUND ON FASTER KEPZ SHIPPING BILLS NOT VERIFIED
ISSUE KEPZ Shipping Bills (Export GDs) do not get verified or validated through FASTER System.
OUTCOME FASTER system deferred all such amount or reject the claims pertains to GDs pertaining to KEPZ.
PROPOSAL Updating is required for KEPZ export/shipments data and it should be linked with Customs and FBR database.
BENEFIT Taxpayer does not face any difficulty in getting the sales tax refund against KEPZ export/shipment.
DIFFICULTIES FOR TIME LIMITATION OF FILING OF ANNEX-H
ISSUE Difficulties in complying with time limitation for filing of Annex-H, due to revision of Sales Tax Return.
If the registered person revises his sales tax return, the FBR system (web-Portal) calculates 120-days for filing of Annex-H according
OUTCOME to the previous filing date of sales tax return instead of the date of revision of return.
It is proposed to resolve the problem and update the FBR system so that due date of Annex-H should be reset in FBR system to allow
PROPOSAL 120 days from the Date of Revision of S.Tax Return for filing of Annexure “H”
PROVINCIAL SALES TAX DATA INTEGRATION
Sales tax invoices pertaining to service providers registered with different provinces sales tax authorities has to date not been
ISSUE integrated with FBR web portal, to allow input claim for tax paid on services.
OUTCOME Due to non-availability of provinces sales tax data on the system , documents have to submitted manually for claiming of refund
PROPOSAL Appropriate mechanism should be in place for availability of sales tax data of services in the system for verification of input.
BENEFIT Ensure admissibility of input tax on service invoices without any doubts.

DISCREPANCY IN SALES TAX RETURN AT ANNEX-B
ISSUE While filing sales tax return, at the step of Annex-B, when import GDs the option “OTHERS” is changed to “FIXED ASSETS”.
OUTCOME System does not allow adjustment of input tax.

PROPOSAL Instead of option “OTHERS”, the option should be provided to insert “H.S.CODE” to avoid incorrect information and denial of input.
BENEFIT Taxpayer could not be deprived of the input tax.
ANNEX F
ISSUE Annex F, itself is unnecessary and does not have any worth to FBR,
In Annex-F linked with annexure A and B only and has no nexus with Exempt Purchase/ Purchases from Un-registered Persons,
OUTCOME services and requires consumption of raw material in supplies which is very cumbersome
Annexure “F” shall be omitted from web portal or necessary amendments be made in it and may be required to be file bi-annually
PROPOSAL instead of each month
BENEFIT Remove the hardships in compliance.
EXPORTERS SHOULD BE ALLOWED REFUNDS OR AT LEAST ADJUSTMENT UNDER SUB-SECTION 7 OF SECTION 3, SERIAL NO. 4
OF ELEVENTH SCHEDULE OF SALES TAX ACT 1990
This is extremely harsh provision and unfair for a country whose exports are very low. Scrap/ Waste (some materials like plastic
waste, paper waste, steel scrap and several similar items) are collected by street scavengers from the drums of solid waste which
ISSUE they sell to recyclers-cum-exporters. It is chargeable to 5% Sales Tax which is actually adds to the cost of material procured by
exporters from unorganized sector.
OUTCOME This results for Pakistan Exporters to become uncompetitive as no refund/adjustment is allowed
It is proposed that Exporters should be allowed refunds or at least adjustments under Sub-Section 7 of Section 3 of Eleventh
PROPOSAL Schedule Serial No.4.
BENEFIT They can increase and manage their exports orders and earn foreign exchange to the national exchequer.

SECTION 26 (3) OF SALES TAX ACT 1990
Provision for revising Sales Tax Returns in already provided in the Sales Tax Act when within sixty days and when the tax payable is
more than the amount paid or the refund claimed is less than the amount claimed previously. However the tax payer is forced to
ISSUE visit the Commissioner several times to grant the permission to revise the return online. Relevant sections are Sales Tax Act 1990,
Section 26(3)
This is a time wasting process where the provision already exists but the taxpayer is forced to make rounds of the tax office for the
OUTCOME Commissioner to grant permission to revise the filed returns. The request is made online but the taxpayer has to run to the tax office
multiple times to get the permission granted.
It is proposed to provide the Option in the e-filing system t to enable the tax-payer to revise returns within 60 days .After lapse of
PROPOSAL 60 days, tax-payer may request permission of the Commissioner for revision of return.
This suggestion is to avoid unnecessary hassle to the taxpayer, reduce the burden on the Commissioner and enhance tax payer
BENEFIT confidence.

1.3 SALES TAX – TAXATION RATES RELATED

CHANGES SALES TAX RATES
Proposed
Existing Existing rate Proposed rate
rate of Brief justification/ rationale for
S. No. PCT code Description rate of of Income of Income Tax Note
Sales Tax change
Sales Tax Tax for 2020-21
for 2020-21
-1 -2 -3 -4 -5 -6 -7 -8
As Custom Duty is zero for exporters Resolve problem of liquidity,
1 84.48 -Textile Machinery- 17% 5.50% 0% 0% registered with Textile Division, Sales stuck up in Sales & Income
& Income should also be 0%. Tax
Sinkers, needles are used in textile
-Sinkers, needles and Resolve problem of liquidity,
sector. Exporters registered with
2 8448.51 other articles used in 17% 12% 0% 0% stuck up in Sales & Income
Textile Division, Sales & Income Tax
forming stitches- Tax
should be 0%.
Sewing machine needles are used in
Resolve problem of liquidity,
textile sector. Exporters registered
3 8452.3 Sewing machine needles 17% 12% 0% 0% stuck up in Sales & Income
with Textile Division, Sales & Income
Tax
Tax should be 0%.
Parts and accessories of Exporters registered with Textile Resolve problem of liquidity,
4 8448.2 machines of heading 17% 12% 0% 0% Division, Sales & Income Tax should stuck up in Sales & Income
84.44 & 84.45 be 0%. Tax
Exporters registered with Textile Resolve problem of liquidity,
5 8451.9 Parts 17% 12% 0% 0% Division, Sales & Income Tax should stuck up in Sales & Income
be 0%. Tax

RAW MATERIAL IMPORTS - 3% VALUE ADDED SALES TAX
Value Addition Sales Tax at import stage on commercial importers of Raw materials items in Twelfth Schedule Part-II was removed
in the Finance Act’2019-20 after lengthy deliberations with FBR and Ministry of Finance for several years, because Commercial
importers do not add any value to raw materials and sell it in the same form.
However the very next year through Finance Act’2020, amendment was made in the Twelfth Schedule to Sales Tax Act’1990 –under
ISSUE the heading “Procedure and Conditions”, in condition (2), 3% Value Addition Sales Tax has been re-imposed on Commercial Import
of Raw Materials.
Also, after re-imposition of this 3% VAT in Finance Act 2020, the amendment made in Sec 8(B) of Sales Tax Act 1990 through
SRO1190(I)/2019 allowing adjustment of input tax to a maximum of 90% of output Tax was not removed. This led to double taxation
as importers were forced to pay Extra 10% Value Addition over and above 3% paid at custom stage.
The anomaly has been created again in the Finance Bill’2020-21. VAT cannot be imposed where no value is added. No inputs such
as Gas, Electricity, Labor or Machinery are used hence 3% VAT was an obvious anomaly and contradiction in law.
OUTCOME THIS LED TO DOUBLE TAXATION AS IMPORTERS WERE FORCED TO PAY EXTRA 10% VALUE ADDITION OVER AND ABOVE 3% PAID
AT CUSTOM STAGE.
The anomaly may therefore be rectified and Raw Materials imported by Commercial Importers shall be excluded from the scope of
Condition (2) under “Procedures and Conditions” Twelfth Schedule of S.Tax Act. Thus removing 3% Value Addition Sales Tax on
PROPOSAL commercial importers which was Re-Imposed unjustly. For importers of Finished products paying 3% VAT at custom stage and
having no local purchase should be exempted from application of Sec 8(B).
1. Remove disparity in rates of Sales Tax on Raw Materials at import stage between commercial importers and industry, because all raw materials
BENEFIT are ultimately consumed in industry.
2. To have a fair taxation regime wherein compliant tax-payers should not be unjustly taxed only to meet the revenue targets.

SALES TAX ON MEDICAL DEVICES
The Importers of medical devices are not allowed to charge 17% Sales Tax and 3 % value addition tax on supplies to Govt. Hospitals
ISSUE and buyers.
Commercial importer have to absorb/bear this huge amount of Sales Tax which creates a negative impact on their profitability and
OUTCOME forces them to Sale their medical products and higher prices to the patients to offset this loss to some extent. These devices also
get very expensive.
Output adjustment of this Sales Tax and Value Addition Tax against supplies to Govt. Hospitals should be allowed to bring down
PROPOSAL the prices of medical products. The Sales Tax on Health care devices should be withdrawn as is the case with Pharma products,
having a life-saving function.
This will reduce the negative impact of their profitability and at the same time they will be able to reduce the medical product
BENEFIT prices which ultimately would give some relief to the patients and bring them to affordable level for the poor patients.
SALES TAX ON DAIRY PRODUCTS

ISSUE Sales Tax On Dairy Products – 8th Schedule to The Sales Tax Act
Through Finance Act, 2015 FBR has levied 10% Sales Tax on following Dairy products and more specifically on Flavored Milk which
contain 85% Fresh Milk. Further, 3% Further Sales Tax is also charged on supplies to un-registered persons. This provison has
negatively impacted the sale and growth of this sector and significant decline in investments which supported dairy farmers:
 Flavored Milk (0402.9900)
 Yogurt (PCT heading 0403.1000)
OUTCOME  Cheese (PCT heading 0406.1010)
 Butter (PCT heading 0405.1000)
 Cream (PCT heading 04.01 and 04.02)
 Desi ghee (PCT heading 0405.9000)
 Whey (PCT heading 04.04)
 Milk and cream, concentrated and added sugar or other sweetening matter (PCT heading 0402.1000)
Earlier these goods were charged with 0% Sales tax being socially sensitive products. The tax rates may therefore be rationalized so
PROPOSAL that public at large get the benefit and dairy industry get support to develop itself in coming years. Moreover, the Further sales tax
(which is currently increased to 3%) shall be abolished for all the dairy products including Flavored Milk.
Good Quality dairy products would be made available to general public and more specifically for children who prefer flavored milk.
BENEFIT The measure will help in import substitution. Further new investment in this under-developed sector would take place and offer
more job opportunities for people.

1.4 SALES TAX – LEGISLATION RELATED

SECTION 25: SALES TAX AUDIT U/S 25 (2) & SECTION 72B (1A)
Sales Tax Audits are being conducted outside the established criteria of computer balloting creating hardship for taxpayers through
ISSUE multiple audits by LTU/RTO, U/S 25 of Sales Tax Act. Sales Tax audits under Section 25(2) & Section 72B can be carried out every year.
Sales tax audit outside the set parameters every year is misused by the tax authorities & creates unnecessary burden for the taxpayer. The
OUTCOME tax authorities already have powers under Section 11(2) to issue show-cause notice to the taxpayer where any tax is short-paid/fraud
situation. Hence, such annual tax audit clause creates duplication of work for the tax payer
It is suggested to restore provision for carrying out audit once in 03 years which was omitted through Finance Act 2019.
PROPOSAL It is proposed that sales tax audit should only be conducted on computer ballot basis.
Audit parameters should be well defined after consultation with stake-holders.
RTOs and LTUs who do not have the capacity to conduct many audits, will have the time to focus on broadening the tax base. The registered
BENEFIT persons will be relieved of such audits outside the criteria of computer balloting. Promote EODB.
SECTION 37
Enquiry before office of IR deemed judicial proceedings within the meaning of 193-228 CPC (Act XLV of 1860). The provisions treats
ISSUE business persons as criminals putting them within the scope of PPC.
OUTCOME Such provisions are in fact the root cause of narrow tax base and a flourishing undocumented economy.
The provision should be removed and replaced with new provisions to separate the jurisdiction to deal with offences of taxation regime
and providing the accused sufficient opportunity of defend his case before the tribunals which are independent of FBR and headed by
PROPOSAL competent judges.
The tribunals should also have the powers to deal with offences and excesses committed by officers performing duties within FBR or any
of its department, division or field formation.
BENEFIT Create a fair taxation regime and prevent abuse of sweeping powers to the officers of Inland Revenue.
PROPOSED AMENDMENTS IN SALES TAX SRO

In serial no. 1 (e) of the table of SRO.483(I)/2008 Dated 28th May 2008 , The PCT code 8517.6930 is mentioned against the description
ISSUE " for Routers"
PROPOSAL In order to reflect updated PCT codes it should be changed to 8517.6270.
Previous PCT code for routers was 8517.6930, but in the year 2017-2018 after the transposition of tariff and the PCT code for routers
BENEFIT is 8517.6270 is substituted. In order to grant the benefit of SRO.483(I)/2008 Dated 28 th May 2008, the updated PCT code for Serial
1(e) of Table of SRO 483 may be substituted. 8517.6270

2 - INCOME TAX
2.1 INCOME TAX – POLICY RELATED

BURDEN AND MULTIPLICITY OF TAXES OVER ALREADY REGISTERED TAXPAYERS & FILERS
ISSUE Currently, the Taxpayers and Filers, particularly the industries are overburdened with multiplicity of taxes.
OUTCOME Overburden of taxes on already registered taxpayers deprive them of level playing field and business viability against non-taxpayers.
It is proposed that all the entities engaged in business having commercial and industrial utility connections but are out of tax
base should be brought to tax-net making them taxpayers and filers.
PROPOSAL According to NEPRA Industry Report 2019 and FBR Tax Directory Data 2018, the number of commercial and industrial consumers
are higher as compared to registered Tax Payers with a huge difference who must be brought into tax-net as they are commercial
and industrial entities but out of tax-net.
It will ease down the burden of taxes over registered taxpayers and shall also broaden the tax base resulting to further
BENEFIT documentation of economy.
EXEMPTION OF WHT PAYMENT FOR EXPORTERS UNDER FTR REGIME U/S 154(3B)
Currently WHT is charged at various levels and items such as import of raw material, registration of new vehicles etc. which is
ISSUE adjusted or refunded later.
Exporters whose Customs Rebate Claims, Sales Tax Claims and WHT Claims are pending face severe liquidity crunch which is
OUTCOME causing them great hardship.
Exporters fall under final tax regime u/s 154(3B) and should be exempted from payment of WHT and be given Exemption
PROPOSAL Certificates. This will greatly benefit them and also lower workload on FBR who are busy in a futile exercise. They will be getting
more time to focus on broadening of tax base which is dire need of the time. Withholding Tax should be reduced from 1% to 0.50%.
BENEFIT - This would also help our exporters in using the cash liquidity for enhancement of the exports of Pakistan.

DISTORTIONS IN WITH-HOLDING TAX REGIME
Imposition of With-Holding Tax (WHT) on various stages of supply chain (Importers, Manufacturers, wholesalers and Distributors)
ISSUE
has created complexities and distortions. It has made compliance very difficult for most tax-payers.
After acquiring powers to access information from all institutions under Sec.56 AB, FBR and its subordinate departments must take
OUTCOME the responsibility to identity non-compliant and undocumented entities/persons instead of laying responsibility on existing
taxpayers.
-WITHHOLDING TAXES COLLECTED AT IMPORT STAGE:
All of these should be converted into ADJUSTABLE TAX against actual liability instead of MINIMUM TAX which is a flawed concept.
For Raw Materials, Intermediates and Machinery attracting tax rate of 5.5%, tax rate should be reduced to 2%.
Commercial Importers of Raw material pay WHT @2.0% up to 5.5% which can only be possible if the Gross Profit is 30%, while the
margin is not more than 2 to 3% on raw materials sold without value addition or change in form. WHT paid on raw materials under
PART III of 12th Schedule be made adjustable against actual tax liability on self-assessment basis. OR be treated in FTR.
PROPOSAL -WHT ON SUPPLIES OF GOODS AND SERVICES

Where, both buyers and suppliers are active tax payers, tax rates should be brought down to levels commensurate to the normal
Net Profit rates in those trades/segments after consultation with stake-holders.
-WHT ON UTILITY BILLS ETC:

Should be applicable only on person not appearing in Active Tax Payer list.
IN ALL CASES WHT SHOULD BE APPLIED ON NET SALE AMOUNT ONLY. IT SHOULD NOT BE APPLIED ON AMOUNT INCLUSIVE OF
SALES TAX WHICH TANTAMOUNTS TO TAX OVER TAX.
1. Remove distortions and complexity in Income Tax regime and increase reliance on Direct Taxes rather than Indirect Taxes.
BENEFIT
2. Restore credibility of system and confidence of tax-payers through a fair taxation regime.

ACCESS TO BANK ACCOUNTS AND TRANSACTIONS OF TAX-PAYERS SEC.140 AND NEW PROVISIONS 56 AB
SEC. 140. Recovery of tax from persons holding money on behalf of a taxpayer. — (1) For the purpose of recovering any tax due by
a taxpayer, the Commissioner may, by notice, in writing, require any person –
ISSUE (a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the taxpayer;
This provision and further access to information on bank accounts under other provisions of law, have been counter-productive and
OUTCOME led to a flourishing cash economy. Many innovative ways have been evolved by businesses similar to block-chain and a local hundi
system. Such provisions only affect the documented businesses while the entire undocumented sector is immune from such laws.
Access to bank accounts may only be limited to accounts of unregistered persons with unusually high amounts of transactions.
PROPOSAL Commissioner should only be authorized to obtain information about the funds in accounts and to seek clarification as to the nature
of transactions and sources of funds. Such persons may be brought into the tax-net
1. Relief to the registered persons and restore confidence in banking system. Encourage official transactions.
BENEFIT 2. Bring unregistered persons into the tax-regime.
3. Stimulate economic activities and growth. Increase bank deposits which may be used for lending to industry.
DISPARITY IN WHT ON MANUFACTURERS & COMMERCIAL IMPORTERS OF YARN
Under SRO-1125/2011 Dated. 31.12.2011, commercial Importers are subject to 3% withholding Income Tax whereas Manufacturers
ISSUE are only subject to 1% withholding Income Tax. Prior to SRO-1125 / 2011 Dated. 31.12.2011 & SRO- 212(1) 2013 withholding Tax
was being charged at a uniform rate of 1% for more than Five years
PROPOSAL 1% withholding Income Tax for both Manufacturers & Commercial Importers is proposed.
1) A level playing field must be provided to both commercial Importers & Manufacturers and support to SMEs.
BENEFIT 2) Fake importers under the umbrella of Manufacturing units will be curtailed while commercial Importers cater to SMEs will
contribute more revenue.

WHT 4.0% TO 4.5% ON GROSS INVOICE VALUE DEDUCTED ON LOCAL SUPPLIES
WHT @4.0% to 4.5% of gross invoice value is deducted on supply of goods by a filer companies and registered persons
ISSUE
respectively.
This results in the middleman demanding from importer/manufacturer to issue invoice directly in the name of ultimate buyer to
OUTCOME
avoid this harsh and excessive tax. As a result, supply chain is broken and the aim of documentation of economy is defeated.
Rate of 4.0% to 4.5% WHT u/s 153(a) is very high. It may be reduced to 1% for filers and it may be adjustable. WHT should be
PROPOSAL
distributed across the supply chain and 1% may be recovered at each stage.
1. Provide relief to documented businesses and encourage documentation.
BENEFIT
2. Bring unregistered persons into the tax net.
AMENDMENT IN SEC 148. CHANGE FROM WHT TO MINIMUM TAX FOR COMMERCIAL IMPORTERS OF RAW MATERIALS
Commercial Importers of Raw material pay WHT @2.0% up to 5.5% which can only be possible if the Gross Profit is 30%, while the
margin is not more than 2 to 3% on raw materials sold without value addition or change in form.
ISSUE By amendment to Sec.148 of Income Tax Ordinance through Finance Bill 2018-19, WHT paid on import of raw materials by
commercial importers has been converted to MINIMUM TAX and the importers have been taken out of Fixed Tax Regime (FTR).
The concept of WHT is unique to Pakistan’s Tax regime which in fact is tantamount to putting the burden of tax-collection from
undocumented entities on the compliant tax payers and avoiding the responsibility to broaden tax-base.
OUTCOME After acquiring unprecedented powers to access information under Sec.56 A and 56 B in ITO, FBR and its subordinate departments
must take the responsibility to identify non-compliant and undocumented entities/persons instead of laying the onus on existing
taxpayers.
1. Concept of Minimum Tax and WHT may be abolished.

2. Tax Payers may be allowed to pay certain Fixed Tax or opt for Audit regime and pay taxes in accordance with actual tax liability on
PROPOSAL Income.
3. All Taxes deducted have to be adjustable against actual tax liability.
Commercial importers who are a major source of revenue will be able to resume their business and contribute to revenue as well
BENEFIT as promotion of SMEs.

MEDIUM DENSITY FIBRE BOARD (MDF) – DOMESTIC INDUSTRY PARALYSED BY IMPORTS
Domestic Industry of Medium Density Fiber Board (MDF) has sufficient capacity to meet 90% of country’s requirements both in
terms of quality and quantity.
However due to concessional tax regime, FTAs, heavy Under-invoicing on imports and DTRE scheme, serious and material damage
has been caused to domestic industry which cannot compete with cheap imports.
Domestic Market size 2018 = 416,254 cubic meters/ annum
EXISTING DOMESTIC CAPACITY
ISSUE Installed capacity = 554,760 cubic meters/ annum
Current production = 398,626 cubic meters/ annum
Idle capacity = 156,134 cubic meters/ annum
Total Domestic Market size 2018 = 416,254 cubic meters/ annum
Imports 2018 = 76,703 cubic meters/ annum

Attached import data shows consistent increase in imports of MDF Board from 2012 to 2018.
1. Domestic production capacity is under-utilized due to imports under concessional regimes and under-invoicing.
OUTCOME2. Imports of MDF adding further to Current Account Deficit and drain on forex reserves.
3. Loss of revenue and unemployment due to unutilized capacity.
1. MDF Board may be taken out of the Items allowed under FTA due to material damage to domestic industry.
2. 100% exemption of CD on import from Sri Lanka clause 'D' of preamble, SRO 280(I)/2014 dated 8th April, 2014]may be withdrawn.
It is massively abused and MDF board
3. 16% Concessions on CD on imports from China [Sr. No. 2059, Table 1, SRO 659(I)/2007] may be withdrawn.
PROPOSAL4. REVIEW Exemptions/Concessions under SROs: Rule 58B, Chapter X, SRO 480(I)/2007.
5. 15% concession of CD be withdrawn on imports from LDCs (SAARC) [S No. 822, Table II, SRO 558(I)/2004]
6. With adequate domestic capacity, import of semi-finished product under DTRE should be restricted. MDF board is categorized as
Intermediate or finished product and not raw material. DTRE concession can only be granted to Exporters of Modular Furniture and
not those using wood as raw material.
1. Utilization of domestic capacity and increase in revenue collection.

BENEFIT 2. Saving of foreign Exchange and reduce trade deficit.
3. Employment generation.

AUDITS U/S 177 (4), 177 (7), 177 (11), 122 (5A) etc. OUTSIDE THE SCOPE OF COMPUTER SELECTION. REPEAT AND
MULTIPLE AUDITS (UNDER 177(7)
Presently, audit proceedings can be started u/s 177 as well as through balloting u/s 214C and like-wise enquiries can also be made
by the Commissioner u/s 122(5A). There is a concept of a special audit panel u/s 177(11) as well.
Sub-Section 7 is ambiguous and provides the Commissioner and his sub ordinates with a tool to harass, extort and victimize any
ISSUE
Tax-payer at will. The Commissioner can re-open the Audit of any person or firm at will on unsubstantiated grounds. SEC.177
SUB-SECTION 4: Any person employed by a firm to conduct audit function may be authorized by the Commissioner to exercise
powers under sections 175 and section 176.
Revenue collection through such recovery proceedings is hardly Rs.92.0 Billion whereas the costs due to litigation, involvement of
entire tax collection machinery and declining number of tax filers, is far more than the collection.
OUTCOME Multiple Audits under various provisions have eroded the trust of tax-payers in the FBR. RTOs and LTUs. Audit functions under
various Provisions have created confusion and complexity in Tax regime. Such provisions are also prone to misuse and a source of
harassment.
 All Audit functions should be brought under one provision of Income Tax Ordinance rather than various over-lapping provisions
with clear and well defined parameters. Audit Parameters should be transparent and open to taxpayers.
 Sub-Section 7 may be deleted.
PROPOSAL
 Powers of the Commissioner and sub-ordinate officials should be curtailed to restore the trust of Tax Payers and encourage
broadening of tax-base. Such Audits should be restricted to specific queries or objections and call for relevant document only rather
than opening and re-opening a comprehensive audit every time.
 Bring transparency and clarity to Audit functions and rules governing the same.
BENEFIT  Prevent harassment to tax payers and abuse of powers by Inland Revenue officials.
 Broaden tax base by restoring confidence in the system.

TAX CREDIT FOR INVESTMENT UNDER SECTION – 65B OF THE ORDINANCE
Prior to Finance Act’2019 Companies were entitled to tax credit of 10% of the amount invested on purchase of plant and machinery
ISSUE in an industrial undertaking set up in Pakistan against the income tax payable. By amendment in Section 65B through Finance Bill
2019-20, the rate of Tax Credit has been reduced from 10% to 5%.
Reduction in rate of tax credit on investment has discouraged further expansion and stifled growth of industry. This ultimately
OUTCOME affects GDP growth as well.
Rate of tax credit may be restored to at least 10% and this credit should be applicable up to FY2025 to enhance the Investment in
PROPOSAL production capacity of industries.
- Promote the investment in plant and machinery resulting increased production capacity giving raise to increased revenues for
BENEFIT Companies and the Government and increase much needed job opportunities for citizens.
UNJUST APPLICATION OF WHT U/S. 236 G & H OF THE ORDINANCE MANUFACTURERS OF FMCGs
ISSUE UNJUST APPLICATION OF WHT U/S. 236 G & H OF THE ORDINANCE MANUFACTURERS OF FAST MOVING CONSUMER GOODS (FMCGs).
Manufacturers of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile,
beverages, paint or foam etc., collect advance tax @ 0.1% for filer (for non-filer 0.2%) & 0.5% for filer (for non-filer 1%) of gross of
amount of sale to distributors, dealers, wholesalers and retailers. At the time of sale.
Most of the goods mentioned above are not fast moving consumer goods. The only FMCG is beverages on which the section 236 G
OUTCOME & H are unjustly applied.
This tantamount to discrimination for beverage manufacturers being the only manufacturer of FMCGs manufacturer class liable to
above tax.
It is not practically possible for manufacturer of FMCGs to collect income tax from dealers, distributors, wholesalers and retailers
and it adds to the cost of consumer products.
The section may be appropriately amended to exclude the manufacturers of FMCGs from being collecting agents under section –
PROPOSAL 236 G & H of the Ordinance.
BENEFIT - To relieve the unjust burden of tax on consumer goods and enable manufacturers of FMCGs to pass the benefit to end-consumers.

EXCLUSION ON REQUIREMENT OF CNIC FOR DISTRIBUTORS ON SALES OF RS.100,000/-
Under section 23(1)(b) of the Sales Tax Act, 1990 exclusion has been provided to retailers, whereby retailers supplying taxable goods
ISSUE to unregistered persons are not required to mention the CNIC unregistered customers, wherein the transaction value inclusive of
sales tax does not exceed Rs.100,000.
Due to the present provisions of the law, the Distributors are facing a dilemma whereby small retailers are purchasing taxable goods
OUTCOME valuing Rs.100,000 from Mega stores (retailers) in order to avoid the requirement of providing the CNIC, resulting in loss of business
for the Distributors who normally used to sell goods to such small retailers
PROPOSAL FBR should extend similar exclusion of Rs.100,000 to distributors as well.
BENEFIT Ease of doing business thereby resulting in enhancement of tax revenue.

2.2 INCOME TAX – PROCEDURAL RELATED

SIMPLIFICATION OF INCOME TAX RETURN FORM
Every year changes are made in Income Tax Form and ironically, it becomes more confusing and difficult for the tax-payers to fill. It is
ISSUE particularly cumbersome for the SMEs including individuals and AOPs.
1. Tax payers have to seek assistance from consultants and pay large amount of fee only to comply with the requirements of tax
return.
2. Due to the changes every year, tax-payers have to wait for the new form to be issued by the FBR which takes a month or two after
OUTCOME
the new budget is approved.
3. The complicated form only helps the business of Consultants and Tax practitioners at the expense of compliant tax-payers.
It is one of the reasons that many individuals prefer to stay out of tax regime and a deterrent to broadening of tax base.
1. Separate Income Tax Return forms for Companies, AOPs, Individuals and salaried class should be created.
2. Forms for SMEs and individuals and retailers should be a simple one page form both in English and Urdu.
3. Manual completion and filing should be allowed for individuals and SMEs in order to encourage documentation.
PROPOSAL
4. Extreme penalties and charges should be avoided in case of late filing.
Errors/short payment should be notified to registered person within two months of filing and correction of errors should be allowed
to tax-filer for up to 3 months of filing without requirement of commissioner’s approval.
- 1. Simplification of filing procedures and documentation.
BENEFIT - 2. Broadening of Tax base and increase in number of filers.
ANOMALY IN PCT CODE OF FERTILIZER /MANURE SPREADER S.NO.91 (SCHEDULE II, PART IV)
Income Tax Exemption under S. No. 91 (ii)(iv) of part IV of Schedule II of Income tax ordinance 2001 PCT code mentioned for Fertilizer
ISSUE or Manure Spreader is 8432.4000.
PROPOSAL As per tariff PCT code should be 8432.4100 for Manure spreader and 8432.4200 for Fertilizer distributor.
In Income Tax Exemption under S. No. 91 (ii) (iv) of part IV of Schedule II of Income tax ordinance 2001 needs to be corrected As per
BENEFIT tariff PCT code should be 8432.4100 for Manure spreader and 8432.4200 for Fertilizer distributor instead of 8432.4000.
8432.4100 & 8432.4200

PROPOSALS-DISTRIBUTORS OF CIGARETTES AND FMCG
FBR has made “quantity” and “unit of measurement” (UOM) mandatory for all the taxpayers while declaring sales in Annexure C
of the monthly sales tax return. Practically and specifically in the distribution business, numerous items of different nomenclature
are sold through a single invoice i.e. a composite invoice The current FBR web portal does not facilitate in reporting the above
transactions. The Composite invoice can involve—
ISSUE - sale of third schedule goods,
- goods subject to standard rate,
- goods subject to reduced or fixed rate of sales tax
- goods subject to zero rate of sales tax
- non- taxable goods
Taxpayers, while reporting a single composite invoice have to separately declare the above transaction quantity wise and regime
OUTCOME
wise by mentioning different suffix after the tax invoice number in order to report the sales.
Quantity and unit of measurement should be made optional and not mandatory, and allow invoice wise-reporting to the
PROPOSAL taxpayers. Or FBR should make necessary amendments in the web portal whereby an option is available for reporting composite
invoice involving goods of different quantities and subject to different tax regime by means of a drop down menu option.
BENEFIT This will simplify the current structure and will ensure accurate reporting

TAXPAYER FOLDER ON FBR E-PORTAL
With the level of compliance demanded by tax authorities there should be one comprehensive location for all data accessible on
ISSUE the e-portal
Distributed information, notices, orders, demands create a hassle for the taxpayer who is already struggling to be compliant and
OUTCOME the same for FBR officials
Create a folder for each taxpayer on the e-portal where all tax related Income Tax and Sales Tax data of the taxpayer is collated:
1. Tax withholding information
2. Notices issued under Sales Tax and Income Tax sorted by Year
3. Replies of the taxpayer
4. Assessment orders
PROPOSAL 5. Rectification applications and rectification orders
6. Appeal orders and appeal effect orders
7. Tax Demand outstanding
8. Income Tax Refunds outstanding and issued
9. Sales Tax Refunds outstanding and issued
This will give a secure view to the FBR staff, taxpayer and other authorized users for a comprehensive look at all tax related matters
BENEFIT and increase taxpayer awareness and promote better self-service and self-compliance.

2.3 INCOME TAX – TAXATION RATES RELATED

TAX OVER TAX U/S.153
ISSUE Tax deducted under Section 153 of ITO 2001 is levied on amount inclusive of Sales Tax which is tantamount to Tax over Tax.
It adversely affects those industries and trade which operate on thin margins and larger scale. Also such practice of tax ove r
OUTCOME tax is unfair.
PROPOSAL Substitute the word "inclusive" with "exclusive" in s. 153(7)(v)(a).
BENEFIT Rectify an obvious anomaly which is continuing for years and create a fair tax regime.
INCOME TAX ON TURNOVER @ 1.5% ON AUTO-PART DEALERS

ISSUE INCOME TAX ON TURNOVER @ 1.5% ON AUTO-PART DEALERS
All dealers, retailers & distributors of other commodities including Motorcycles are taxed 0.25% percent of their sales. However
OUTCOME Auto parts dealers’ retailers and distributors are taxed at 1.5% of their turnover.
This discrimination should be removed and Auto parts dealers’ retailers and distributors should be taxed at 0.25% of their
PROPOSAL turnover without any turnover limit.
This change will encourage Distributors, Dealers and Retailers to get them registered and to help government towards
BENEFIT documented economy
ANOMALY IN TARIFF ON UNCOATED PAPER

Some heads of Chapter 48 covering Paper and paper board have been accepted as raw material with reduced WHT of 2%.
ISSUE However H.S Code 4802 which covers uncoated papers which are the raw material for publishers, has not been granted the same
reduction.
The books which are the backbone of education, become expensive and thus defeat the government objective to educate
OUTCOME children.
PROPOSAL Imports under H.S Code 4802 may also be granted the status as given to H.S Code 4810, whereby WHT of 2% is charged.
BENEFIT Import of paper will become affordable which benefit will be passed on to publishers and printers for their raw material.

ANOMALY IN TURNOVER TAX ON TRADERS OF COTTON YARN
By virtue of SRO.333 (I) 2001 dated 02.05.2011 the traders/ brokers of Cotton Yarn had been subjected to Turnover Tax at
concessional rate of 0.1% which constitutes about 10% of their margin. Provision of rate of minimum tax @ 0.1% was made
ISSUE
under clause 45(A), PART IV Second Schedule to the Income Tax Ordinance 2001, read with SRO 333 (1) 2001 Dated 02 May,
2001.
To compound the misery of Yarn Traders an amendment was made through Finance Act’2020 whereby Yarn Traders have been
taken out of the scope of Clause 45A (PART IV of 2nd SCHEDULE) and the exemption from application of minimum turnover tax
OUTCOME under SEC.113 has been withdrawn which prescribes 1.5% Turnover Tax. Accordingly, the Yarn Traders are now subjected to
Turnover Tax at the rate of 1.5% which is way above their actual margin. Consequently, the Yarn traders are unable to continue
their business with such high rate of Turnover Tax.
The correct approach to treat the levy of concessional rate on Yarn Traders, by insertion of the provision of Minimum Turnover
PROPOSAL Tax @ 0.1% for the traders of Cotton Yarn in the First Schedule Part-I, Division IX (exempting Yarn Traders from Minimum 1.5%
Tax Under Section 113 of Income Tax Ordinance 2001)
1. Remove an obvious anomaly and provide relief to an important segment within the textile supply chain which act only as
BENEFIT middlemen and earn nominal margin on sale of raw material for textile industry.
2. Save Yarn Traders from moving into undocumented regime.
SALES TAX ON INDUSTRIAL MACHINERY
Sales Tax on Industrial Machinery is 17%, if not locally manufactured; the importer can pay 10% cash and submit a postdated
ISSUE cheque for 7% in case of Industrial importer and a pay order or Bank guarantee if imported by commercial importer. These are
returned to the importers on production of Sales Tax Return, Annexure-B duly filled in showing as fixed assets.
OUTCOME This is a cumbersome and unnecessary procedure, consuming time and efforts of the importers as well as of government staff
All kinds of Industrial Machinery used in the production of goods may be exempted from Sales Tax if imported by manufacturers
PROPOSAL and if such machinery is not manufactured locally. Machinery imported by Commercial importers may be released on payment
of Sales Tax @10%.
All kinds of machinery whether imported by industry or commercial importers, ultimately is used in industrial production which
BENEFIT helps in growth and employment generation.

HIGH RATE OF WHT ON MEDICAL DEVICES
The Income tax rate of 5.5% on import of medical devices is charged on Duty/Taxes paid values which practically works out to
ISSUE over 8% on 20% duty slab.
OUTCOME As a result the devices become very expensive as it is a minimum tax & it also squeezes the finances of business.
PROPOSAL This tax should be reduced to 1% like Pharma products.
BENEFIT This will result in reduction in prices of medical devices, ease out Financial Burdon to given some space to promote business.
FIRST SCHEDULE TAX ON NET INCOME
ISSUE First Schedule Tax on Net Income

Slab of 35% on income above Rs.6.0 M is very high and disincentive. Rate should be brought down to at least for companies
OUTCOME having turnover less than Rs.1000.00M
PROPOSAL Highest slab of income tax be reduced to 20% for commercial importer as well as small companies.
WHT ON DISTRIBUTORS OF CIGARETTE AND FMCG
Currently, minimum tax on distributors of Pharmaceuticals, FMCG and cigarettes is 0.25%. However, the withholding rates on
ISSUE
Pharma and cigarette is 1% and FMCG is 2% which are too high.
OUTCOME Rates of WHT on Cigarette and FMCG is too high in view of the volume of trade and low margins.
Distribution is a high turnover business with low margins. It is proposed to bring down the WHT rates in line with minimum tax
PROPOSAL
which is 0.25% on all products.
The relief sought will improve economic progress and more job opportunities and create balance in the distributor’s business
BENEFIT
model

2.4 INCOME TAX – LEGISLATION RELATED

POWERS TO SELECT AUDIT CASES U/S. 177 AND 214C
Through Finance Act 2019 powers of Commissioners & Board have been restored to select cases for audit every year which
ISSUE further creates difficulties for registered persons, whereas prior to FY2019-20 audit could be conducted once in 3 years.
The Commissioners already have various powers to carry out amendments of the income tax returns filed for any tax year by the
taxpayer under Section 122 (5A). Therefore, additional audit powers outside the Standard Audit Parameters are often misused
OUTCOME by the tax authorities. Multiple and overlapping discretionary powers are precisely the hurdle in broadening of tax base, and
corruption. Rather than focusing on broadening the tax base, FBR is coming up with novel ways to perpetuate a regime of
extortion and harassment. Consequently the country is going nowhere in expanding the tax base and revenue collection.
The audits under Section 177 & 214C should be carried out once in every 3 years as was introduced through Finance Act 2018,
through restoration of clause 105 omitted in Finance Act’ 2019. Despite of this restriction the Commissioner can carry out
PROPOSAL assessment u/s. 122(1)/(5) or 122(5A) on the definite information or where declaration of tax payer is erroneous and prejudicial
to the interest of revenue.
BENEFIT Alleviate fears of compliant tax-payers. Removal of harassment and extortion through uncalled for and unnecessary audits.
STAY OF RECOVERY BY COMMISSIONER (APPEALS) UNDER SECTION 128 (1A) OF ITO 2001
Currently the Commissioner (Appeals) grants stay for 15 days only and after expiry of the stay the taxpayer has to file repeated
ISSUE extensions until the decision of the Appeals. Relevant Sections are: ITO 2001 Section 128 (1A)
OUTCOME This is a cumbersome process which is quite unnecessary and causes undue hardship
Amendment be made to Section 128 (1A) of the ITO 2001, to increase the stay duration to Ninety (90) days instead of 15, and
PROPOSAL extend order timeline to 180 days instead of the existing 30 days
BENEFIT - This will eliminate unnecessary documentation and save time of both the taxpayer and the Commissioner (Appeals)

STAY OF RECOVERY BY APPELLATE TRIBUNAL UNDER SECTION 131(5) OF THE INCOME TAX ORDINANCE 2001
Currently Appellate Tribunal grants stay of 30 days or 60 days and after expiry of the stay the taxpayer has to file repeated extension
ISSUE until the decision of the Appeal. Relevant Sections are: ITO 2001 Section 131 (5)
OUTCOME This is a cumbersome process which is quite unnecessary and causes undue hardship
PROPOSAL Amendment be made to Section 131 (15) of ITO 2001, to automatically grant a stay till the date of the decision of the Appeal.
BENEFIT - This will eliminate unnecessary documentation and save time of both the taxpayer and the Appellate Tribunals
TIME LIMIT PROVIDED IN SECTION 161 OF THE ITO FOR MONITORING OF WITHHOLDING TAXES
As per Sections 174 of the ITO the taxpayer is required to maintain accounts and documents of six years after the end of tax year
ISSUE to which they relate. However no time limit is prescribe in section 161 of the ITO for monitoring of withholding tax. Relevant
Sections are: Income Tax Ordinance Section 161
As no time limit is prescribed for monitoring of withholding tax, taxpayers are receiving notices for periods beyond six years for
OUTCOME which they are not obliged to maintain records. Further field officers force on recovery from withholding agents despite the fact
that the person from whom tax was to be withheld has already discharged his tax liability
To impose time limit of 1 year from date of filing of WHT statement for passing an Order under sections 161/ 205 of the Income
PROPOSAL Tax Ordinance 2001. Time limit should also be provided in Section 161 of the ITO for monitoring of withholding taxes.
BENEFIT This will result in resolving of disputes with tax authorities

3 - CUSTOMS

SRO 327 EXPORT ORIENTED UNITS
Export Oriented Units (EOU) under SRO327 was introduced on the pattern of Export Processing Zone where there is no taxes on
ISSUE buying of locally procured input goods and no taxes on utilities. Industries registered in Export Oriented Units (EOU) are liable to
export 80% of their annual production.
Regretfully Federal Board of Revenue (FBR) vide SRO 747(I)/2019 dated 9th July, 2019 has withdrawn the exemption of sales tax
OUTCOME and federal excise duty on buying of locally procured input goods by exporters operating under Export Oriented Units and Small
and Medium Enterprises Rules, 2008 under SRO327 by omitting the clause 10 sub-section (b) and (c) of the said Rules.
Proposed that FBR should withdraw its SRO 747(I)/2019 dated 9th July, 2019 so that exporters operating under Export Oriented
Units can procure input goods without taxes.
PROPOSAL Further it is also proposed that Industries, registered in Export Oriented Units (EOU) and export 80% of their annual production,
should be supplied Utilities - gas and electricity without sales tax at zero rate.
BENEFIT To bring Export Oriented Units at par with units in EPZs.

DUTY & TAX REMISSION FOR EXPORTERS (DTRE): GARMENT STITCHING UNITS MANUFACTURERS-CUM-EXPORTERS WHO
DO NOT HAVE COMPOSITE UNITS BE ALLOWED FACILITATION UNDER DTRE SCHEME
Stitching Units Manufacturers-cum-Exporters who do not have composite units but get the work done outside through vendors
are not allowed facilitation under DTRE scheme.
The facility of import of raw materials / yarn under the DTRE scheme only allowed to composite units.
ISSUE
There is clear discrimination within the country as composite units are allowed and Manufacturers-cum-Exporters who do not
have composite units are not allowed.
Further FBR Department is disallowing the exporters to get their manufacturing related work from sub-contractors / outsource.
The facility of import of yarn by the Stitching units for manufacturing of garments meant for export under the DTRE scheme is not
available, however, Majority of the exporters are Stitching Unit - Manufacturers cum Exporters and procure 90% of their yarn from
the spinners (amounting to 90% Sales of Spinners) and convert this yarn which is then got knitted, weaved, dyed and printed
outside their units. Likewise, any other unit (single part of value chain – knitting/ weaving/dyeing/ printing). In the DTRE Rules
there is no restriction for Stitching Units - Manufacturers cum Exporters for the duty free import of raw materials such as
OUTCOME yarn/fabric/fiber etc. but the MCC, Custom House, is not allowing DTRE facilities to those small and medium size manufacturers
who do not have in-house 100% manufacturing facilities.
The stitching units – manufacturers-cum-exporters are facing great difficulties and their cost of doing business is increasing
considerably making them uncompetitive in the global market against regional competing countries and their exports are greatly
affected.
All Stitching Unit and/or any other single unit of value chain (either knitting/ weaving/ dyeing/ printing) are Manufacturers cum
Exporters and are registered with Ministry of Textile Industry should be allowed for DTRE scheme as the Ministry has complete
relevant details of textile units hence, there will be no question of any misuse.
In view of the above, we request that permission for import of yarn and other raw materials to the stitching units and/or any other
single unit of value chain (either knitting/ weaving/ dyeing/ printing) for manufacturing of garment meant for export under the
PROPOSAL DTRE Scheme be allowed to Licence holders (Exporters) of Textile Division which licence is renewed after every two years.
All textile units should submit Application to RDA Cell, Textile Division for permission all imports under DTRE where the MINTEX
shall approve the application and send information copy to FBR. Application of import under the DTRE scheme should be
processed within 24 hours. (Current processing time is 15 to 30 days).
Also Goods imported under the DTRE scheme should be allowed for export within 24 months, instead of the current 12 months
period.
The facility will encourage and boost the Confidence of Exporters to enhance their exports and cement their business ties with the
BENEFIT foreign counterparts to capture true business potential.

DUTY ON IMPORT / EXPORT OF COTTON YARN
Presently there is 5% Customs Duty and 2% Additionally Duty on import of Cotton Yarn, while the Government has recently
ISSUE removed the Regulatory Duty of 5% on request of Exporters.
This has created artificial shortage of availability of yarn, rendering the Value Added Textile Exporters uncompetitive in the global
OUTCOME market against regional competing countries. This will lead to decline in exports as local industries are hurting and closing down.
Further Garment Stitching Units are not allowed to import Yarn under DTRE.
It is proposed that whenever Government desires to impose regulatory duty on import of cotton yarn, the Government should
also impose regulatory duty on export of cotton yarn and there should be time limit / duration of imposition of duty.
It is proposed that for manufacturer-cum-exporters duties on import of Raw Materials and Intermediate goods for re-exports
PROPOSAL should be 0%.
Alike, Zero Duties on import of cotton, the Government should allow DUTY FREE IMPORT OF COTTON YARN to facilitate the Value-
added Textile Industry.
Yarn is essential raw material to manufacture value added textile products for export, hence, it must be available in required
BENEFIT quantity and reasonable prices.
HIGH TARIFF RATES ON IMPORT OF FOOD AND CONSUMER ITEMS

The government has imposed number of duties on imported food items due to which the smuggling of these items is increasing
ISSUE day by day and the legal importers who are paying heavy duties are suffering from financial hardships and their business is badly
affected.
It has become very difficult for the legal importers to compete in the market and to suffer huge losses and due to these regulatory
OUTCOME duties unethical imports find it attractive to go for under-invoicing and creating huge problems for the legal & ethical importers
Therefore it is proposed that Regulatory Duties on food items in consumer packing must be withdrawn. Current tariff rates
must be rationalized to a reasonable level as in spite of SRO.237 most of the supermarkets are filled with goods in English &
PROPOSAL
other language labels Instead of the mandatory requirement of Urdu labeling.
BENEFIT 1. Discourage smuggling of food items in finished consumer packing and reduce consumer prices.
2. Increase in revenue by allowing legitimate import and curb under-invoicing.

ANOMALIES AND TAXES AND CUSTOMS DUTY REGIME ON BLACK TEA CAUSING MASSIVE SMUGGLING
Consumption of Black Tea in Pakistan is 240,000 metric tons, but the imports through legal channels is hardly 100,000 metric tons
due to very high rates of Customs Duty, Sales Tax, Regularity Duty and WHT. Remaining requirement is fulfilled by Smuggling,
ISSUE
ATT, and imports under various exemptions/concessions granted to PATA and Azad Kashmir which conduct 90% of official imports
and sold all over Pakistan in tariff areas.
Legitimate importers have been driven out of the market due to distortions in tax and duty regime, while also the government is
losing a substantial amount of revenues. BLACK TEA imported in bulk and wholesale packing is treated as finished product in 12TH
OUTCOME
SCHEDULE (TABLE 3) whereas it should be treated as raw material because Black Tea goes through a process of Blending and
Packaging while also the taxes are charged on MRP.
BLACK TEA is an essential food item used in every household and common man. Such high tariffs while exemptions to select areas
are only supporting misuse of concessions and smuggling. The tariff structure may therefore be rationalized as proposed while
exemptions to PATA and Azad Kashmir be withdrawn as these are sources of revenue leakages :
CURRENT RATE PROPOSED RATE
PROPOSAL
CUSTOMS DUTY 11% 5%
R.DUTY 2% 0%
SALES TAX 17% 7%
WHT 5.50% 2%
1. Prevent misused of exemptions and significantly increase revenue by Rs.70 to Rs.80 Billion.
BENEFIT
2. Significant relief to entire population in an essential food item which is most expensive in Pakistan.
EXCESSIVE CUSTOM DUTIES ON IMPORT OF EMPTY ALUMINUM BEVERAGE CANS

ISSUE EXCESSIVE CUSTOM DUTIES ON IMPORT OF EMPTY ALUMINUM BEVERAGE CANS
Currently the Empty Aluminum Beverage Cans are subject to 32% of Custom Duties as compare to 11% in June 2016 or 12% June
OUTCOME 2017. In addition to that such cans are also subject to higher valuation rates through valuation rulings issued time to time.
PROPOSAL Rate of duties shall be rationalized to avoid monopoly of local manufacturer and shall be reverted back to its original position.
An appropriate approach in this situation will be to remove operational inefficiencies, reduce cost of doing business and create an
BENEFIT environment of competition for better quality and price.

INCLUSION OF AUTOMOBILE AND MOTORCYCLE SPARE PARTS IN THIRD SCHEDULE – REQUIREMENT OF MRP
Due to inclusion of Motorcycle and Automobile Spare parts in the Third Schedule, to the Sales Tax Act’1990 vide new serial
No.49 in column (1) through the Finance Bill’2019-20, Serious hardship is being faced by importers of Motorcycle and
ISSUE
Automobile spare parts. Under the amended procedure, importers are required to print MRP (Maximum Retail Price) on the
imported parts and pay Sales Tax and Additional Sales Tax on Customs Value.
1. Importers do not have any means to determine the landed cost at the time of delivery of cargo at destination due to the
fluctuations in exchange rates.
2. It is not possible to determine the sale price of imported auto parts at which the retailers will sell the same to end-users. There
is wide variation in sale prices by wholesalers and retailers. Importers cannot pre-determine and declare MRP as required under
OUTCOME
the new regulations.
3. Due to market fluctuations and rapidly changing demand and supply situation, importers cannot determine the final sale price
and GST accordingly at import stage.
4. Frequent and unpredictable fluctuation in exchange rates make it impracticable to forecast the actual landed cost and sale prices.
Motorcycle and Auto parts are not a consumer product /grocery item which may require MRP to be printed on the product. It is
an industrial use product, supporting Pakistan’s auto industry and meeting the requirements of after-market. Therefore the
PROPOSAL Automobile/Motorcycle spare parts may be taken out of Third Schedule and included in normal tax regime for assessment of
Customs Duty, Sales Tax and WHT etc. Customs authorities have the competency to assess the values and levy the Customs Duty
and Taxes accordingly.
1. Facilitate importers and dealers in customs clearance and avoid detention and demurrage charges.
2. Curtail rampant smuggling which has been on the rise after inclusion of Auto-parts in Third Schedule.
BENEFIT
3. Support automobile industry and after market.
4. Prevent delays in clearance and resulting costs.

PAPER AND PAPER BOARD-ANOMALIES
Paper and Paper board are a raw material for the Printing and Publishing Industry who convert it to books & packaging for the
ISSUE consumers. But due to high tariffs, the printing industry in Pakistan has declined because a greater part of text books, magazines
and publications are now printed in Malaysia and Singapore etc. by Pakistani publishers due to lower cost and anomalies.
Items of Paper and paper board are assessed to highest rate of applicable import duties being treated as Finished Goods. This
OUTCOME raises the cost effecting common man who has to pay for the costs.
The Imports under H.S Code Chapter 48 be treated as Raw Material or Semi-Finished Goods and therefore must be assessed to
PROPOSAL lower import duty rates to support local printing industry and reduce cost of educational books as well.
The reduction in cost due to lower import duty rates will make this raw material for books and packaging affordable, for the
BENEFIT domestic as well the export industries resulting in competitiveness in exports and relief to the common man.
ADDITION OF OPTICAL FIBER CABLES (PCT NO. 8544.7000) AND TELEPHONE CABLES (PCT NO. 8544.4910) IN SRO
211(1)/2009, DATED 05-03-2009, SCHEDULE XXIV, FOR REPAYMENT OF CUSTOMS DUTIES
Under S.R.O. 211(I)/2009 Dated 05-03-2009 Schedule XXIV for the repayment of custom duties, Power Cables are available,
ISSUE however, Optical Fiber Cables (8544.7000) & Telephone UG Cables (8544.4910) are not present for duty drawback which we are
exporting from Pakistan for last several years.
Industry is facing difficulties in Export Orders due to International competition with smaller delivery timelines. As per the DTRE
rules {SRO 450(I)2001 Dated 18-JUNE-2001 – AMENDMENT SRO 506(I)/2007 Dated 09-JUNE-2007}, the procedure to avail the
OUTCOME DTRE is very exhausting due to which at times while our case was under verification, either cause us Late Deliveries charges or
Cancellation of Order.
To incorporate the following in S.R.O. 211(I)/2009 Dated 05-03-2009 Schedule XXIV for the repayment of custom duties
applicable from the issued date of 5th March 2009.
PROPOSAL
1. Optical Fiber Cables – OFC (8544.7000)
Telephone / UG Cables – UG (8544.4910)
There is good potential for Exports of above-mentioned products and additional support through duty structures the local
BENEFIT manufacturers, more opportunities will be created to participate in International Tenders and enhance exports

REVIEW OF TARIFF RATES FOR DOMESTIC CABLE AND OPTIC FIBRE CABLES INDUSTRY
Raw materials used in the manufacturing of Optic Fiber Cables are imported under “FIFTH SCHEDULE” Part-III (108) which are
ISSUE subject high rates of Customs Duty and Additional Customs Duty charged vide SRO.670 (I)/2019 increasing the cost of locally
manufactured cable which cannot compete with imported Chinese cables
Due to higher cost of raw materials, as local manufacturer we do not have the level playing field. Currently we are importing the
raw materials paying the high tariff of duties. On the other hand, cost of manufacturing is one of the highest in the region in terms
OUTCOME of utility charges, man power and taxes. Whereas, International competitors are having the advantage of locally available raw
materials at low cost as well as they are getting a handsome rebate on all exports which is hurting our local cable industry badly.
Changes in Custom Duties on the industrial raw materials used in the manufacturing under Part-III of the FIFTH SCHEDULE to the
Customs Act 1969 for the manufacturing of Optical Fiber Cable, Telecommunication Cables & Wires, Serial No. 108 of the table
are proposed as under:
PROPOSAL
Also, to exclude the above industrial raw materials from the preview of additional custom duties vide SRO 670(I)/2019.
If local industry will get the support by lowering the custom duties for local manufacturers, cable industry has potential to cater
BENEFIT all the IT / Telecom requirements saving the valuable foreign exchange and increasing the exports. With this support for domestic
industry we can substitute the imports.

NO ADJUSTMENT ON IMPORTS OF RAW MATERIALS BY INDUSTRIAL UNDERTAKING FOR MANUFACTURING OF OPTICAL FIBER CABLE
Importing raw materials for own use by industrial undertaking for the manufacturing of Optical Fiber Cable currently lies under Part-III of Twelfth
ISSUE Schedule, for which no adjustment of Income Tax is available, collected by Customs at the time of import.
With effect from 01.07.2020, Section 148 of the Income Tax Ordinance, 2001 (the “Ordinance”) has been amended and Twelfth Schedule has
been inserted to the Ordinance vide the Finance Act, 2020 and by virtue of the aforesaid amendments tax collected on items specified under
Part III of the Twelfth Schedule to the Ordinance has been made minimum tax and tax credit is not allowed.
OUTCOME Stakeholders from our industry were not consulted before making amendments. As a result, most of raw materials consumed by our industrial
undertaking are included in Part III of the Twelfth Schedule, for which no adjustment of Income Tax (collected by custom at the time of import)
is available in final tax liability.
Almost all component of our finished goods comprise of imported raw materials as per below List of raw materials and classified under Part III
of the Twelfth Schedule to the Ordinance is. Therefore we request for adjustment of Income Tax and Tax Credit thereon for all items in annexure
"A".
IT-
H.S. CODE DESCRIPTION H.S. CODE DESCRIPTION IT-2020
2020
9001.1000 OPTICAL FIBER 5.50% 7312.1010 7 STRANDED GALVANIZED STEEL WIRE 5.50%
3916.9000 FIBER RE-INFORCED PLASTIC (FRP) 5.50% 7217.3090 COPPER COVERED STEEL WIRE 5.50%
3921.1900 CABLE MARKING TAPE./ Identification Tape 5.50% 3215.9090 COLORING INK (CHINA) 5.50%
5402.1100 ARAMID YARN 5.50% 3909.5000 TPU COMPOUND 5.50%
WATER BLOCKING SWELLABLE TAPE & PET
5604.9000 5.50% 3206.4910 MASTERBATCH FOR TPU COMPOUND 5.50%
LAMINATED WATER BLOCK SWELLABLE TAPE
PROPOSAL 5606.0000 WATER BLOCKING / SWELLABLE YARN 5.50% 3204.1700 PIGMENT MASTER BATCH 5.50%
7019.1200 GLASS YARN 5.50% 3920.6310 POLYESTER TAPE 5.50%
7213.9199 HIGH CARBON STEEL WIRE 0.8/1.0MM 5.50% 3506.9190 Hotmelt Sealent / Micro Melt 5.50%
FBR has also issued draft amendments regarding import rules under Section 148 of the Ordinance vide SRO 615(I)/2020 dated July 9, 2020,
which is a time consuming and cumbersome process and need to be readdressed.
It is proposed that Exclusion may be given to Cable manufacturers in Finance Bill 2021-22 for relevant raw materials classified under Part III of
the Twelfth Schedule to the Ordinance may be treated as classified under Part II of the Twelfth Schedule.
Annexure "A"
The rate of advance tax may collected by the Collector of Customs under section 148 will be as under through Twelfth Schedule
Part 2 HS-Code 3901.2000, 3907. 2000, 5402.1100, 5509.9900, 7210.1290,7210.5090, 7408.1100, Tariff Rate 2%
7606.1200. {This part reflects raw material thereof mentioned}
Part 3 HS-Code {This part reflects mixed goods thereof mentioned} Tariff Rate 5.5%
Domestic manufacturers will compete locally and internationally by reducing their cost of manufacturing. Further, Tax saving can
BENEFIT result in investing new technologies and creating more employment opportunities.

HIGH RATES OF DUTY AND SALES TAX ON SODIUM METABISULPHITE
Sodium Metabisulphite is used in the export-based industries textile and due to existing current account deficit the government of Pakistan
is making efforts to increase export. Sodium Metabisulphite is the raw material for dyeing & color remover of textile products. It is essential
ISSUE to keep the cost of raw materials at minimum level to increase in exports. This item previously used to be under SRO-1125. Due to the Higher
Taxes (Sales Tax 17% Add. Sales Tax 3%, Income Tax 2%) the cost of said raw material is higher.
High cost of an essential input for textile industry and export products which have to compete in global market. Similarly the cost of fabric
OUTCOME and garments for domestic consumers is unaffordable.
It is proposed to rationalize Sales Tax, Additional sales tax & reduce the amount of Advance Income tax (Withholding Tax) accordingly, so that
PROPOSAL textile units “Cost of doing business” may be reduced.
BENEFIT Decrease the cost of exports of textile products & Increase the textile exports of Pakistan.
HIGH TARIFFS ON SODIUM HYDROGEN SULPHITE H.S. 2832.1010

Sodium Hydrogen sulphite is used in the export-based textile industries but due to high tariffs, the cost of this critical industrial input is very
high making our exports uncompetitive. Due to existing current account deficit the government of Pakistan is making efforts to increase
ISSUE export. This item previously used to be under SRO1125. Due to the Higher Taxes (Sales Tax 17% Add. Sales Tax 3%, Income Tax 2%) the cost
of said raw material is very high.
High landed cost of Sodium Hydrosulphite significantly adds to the cost of production and impacts the volumetric percentage of exports & the
OUTCOME cost of export. We already facing high landed cost on imports due to high amount of Sales Tax, Additional Sales Tax & Advance Income Tax
(Withholding Tax) on import of said raw material.
It is proposed to rationalize Sales Tax, Additional sales tax & reduce the amount of Advance Income tax (Withholding Tax) accordingly, so that
PROPOSAL textile units “Cost of doing business” may be reduced and making exports more competitive.
BENEFIT Decrease the cost of doing Export business & Increase the textile exports of Pakistan.
HIGH RATES OF C.DUTY AND TAXES ON FORMIC ACID

Formic acid use is extremely intensive (99% usage of total product) in the export-based industries textile & Leather. High tariff rates including
Custom Duty 16%, Add. Custom Duty 4%, Sales Tax 17% Add. Sales Tax 3%, WHT 2%) sharply increase the cost of Said raw material cost.
ISSUE Consequently, the cost of our exportable items such as textiles and leather increases and making them uncompetitive. The item was previously
imported subject to provisions of SRO 1125.
High import cost of FORMIC ACID has badly affected the cost of production of Textile and Leather industries which export a substantial
OUTCOME percentage of their products. High input cost renders our exports uncompetitive and also negatively impact the domestic sales.
It is proposed to rationalize the rates of Customs Duty, remove Sales Tax, Additional sales tax & reduce the amount of With-holding Tax
PROPOSAL accordingly, so that textile and leather units “Cost of doing business” may further reduce.
BENEFIT Decrease the cost of doing Export business & Increase the textile & leather exports of Pakistan.

CHANGES IN CUSTOMS ACT
Name of Proposing Brief Justification/
Existing section/clause of the Act Impact, if any, on any SRO/
S. No. Firm/ Association/ Suggested Amendment Position after suggested change Rationale for
requiring amendment Rules
Chamber proposed change
-1 -2 -3 -4 -5 -6 -7
Presently, more than 3100
(Customs Agent Licensing ) SRO Rule 96 Licences have been issued by
450 (I) /2001 Dated 18-06-2001 It is suggested that certificate of (d) Certificate of participation the Licensing MCC-A (West)
As per Rule 95(10)
Rule 96 of Chapter VIII (d) participation in mandatory course (once in every two years or and it is quite difficult to carry
license are
DFB Gypsum Certificate of participation (once may be issued by the DGT once in once in every five years) in out Six Days Mandatory course
1 renewed for two
Industries in every two years) in mandatory every two years or once in every mandatory course from due for all customs agents
years as well as
course from Directorate General five years subject to the renewal Directorate General of Training licensed by MCC with in
five years.
of Training and Research (Customs period of licences. and Research (Customs , Sales stipulated time because DGTR
, Sales Tax and Federal Excise). Tax and Federal Excise). is also engaged in other
activities of training of staff.
Amendment may be made in
section 25-A of the Customs Act,
1969 to issue Valuation Ruling
within 60 days of the receipt of Trade and industry
the application from importers. suffer due to delay Goods will be assessed to
Issuance of Valuation Ruling
All the prices are available on net. Valuation Ruling will be issued in issuance of Customs Duty & Taxes on the
DFB Gypsum under section 25-A of the Customs
2 Moreover, China and Pakistan within 60 days of the receipt of Valuation Ruling basis of prevailing prices,
Industries Act, 1969 takes a very long time.
have agreed to share data of the application from importers. on account fast benefiting the importers as
There is no time limit.
import and export prices. changing market well as the government.
Directorate of Customs Valuation prices.
to remain open on Saturdays. This
will help reduce the back log and
facilitate trade and industry.

4 - FEDERAL EXCISE DUTY (FED)

DUAL TAXATION ON BEVERAGES
ISSUE DUAL TAXATION ON BEVERAGES
Concurrent levy of FED and Sales Tax on manufacturing constitutes double taxation resulting increased cost of production rendering the
vulnerable industries uncompetitive and encourage smuggling.
OUTCOME In addition to these indirect tax and duty, beverages are also subject to advance income tax under Section – 236G and 236H of the
Income Tax Ordinance, 2001. Further, income of such manufacturers of beverages are also subject to Normal Corporate and Super Tax.
Federal Excise Duty on manufacturing should be phased out as the Federal Excise Law is outdated and it has been commitment of
PROPOSAL successive Governments to abolish this colonial era tax.
This would not only enhance Competitiveness of the industries, expand the tax base & registered / documented economy and discourage
BENEFIT smuggling but would also result in growth and increase the investment.
FED ON BEVERAGES / CONCENTRATE
ISSUE FED ON BEVERAGES / CONCENTRATE
Excessive FED is charged on supply of beverage concentrate and beverages. Currently, concentrate is chargeable to FED @ 50% ad
OUTCOME valorem being highest rate of FED under Federal Excise Act, 2005. Whereas beverages are charged to FED @ 11.5% on retail price.
Beverages are also subject to General Sales Tax on retail price and Income Tax at the time of supply.
FED on beverages was reduced from 12% to 6% through Finance Act 2011 without corresponding reduction in rate of FED on beverage
PROPOSAL concentrate. Rate of FED may be reduced on beverage concentrate from 50% to 25% and on beverages from 11.5% to 5% as beverage
are not anymore a luxury item and is consumed by all income groups.
Reduced FED would give relief to the manufacturers from excessive burden of taxes and would reduce extra cost of business of
BENEFIT beverages. This would help to reduce consumer prices and increase consumption.

FED ON RETAIL PRODUCTS
ISSUE FED ON RETAIL PRODUCTS
As per Section – 12 (4) of Federal Excise Act, 2005, goods which are chargeable to FED on retail price, FED shall be paid on the retail
OUTCOME price fixed by the manufacturer, inclusive of FED itself. This means the FED is also charged on FED, hence, raising cost for
manufacturers.
Provision of aforesaid section shall be amended to its post 2007 position to avoid irrational charge of FED on FED as under every
PROPOSAL taxation law tax is not included in price to calculate the said tax such as custom duty or sales tax is not included for the purpose of
calculation of custom duty or sales tax.
By such much needed and rational amendment, FED would be charged as per canon of justice and only once on the value excluding
BENEFIT the duty like custom duty and sales tax. This would remove additional burden on manufacturers and end consumers.
FED ON FRUIT JUICES
ISSUE FED ON FRUIT JUICES
Through Finance Act, 2019 5% FED is levied on Fruit Juices. In addition to FED, Juices are already subject to Sales Tax @ 17% on
OUTCOME Retail prices.
Fruit Juices are consumed by Kids as source of energy for them and are not luxury products. The imposition of FED has unnecessarily
PROPOSAL created additional cost for end consumers.
Position prior to Finance Act, 2019 shall be revived by abolishing FED on Fruit Juices. This would increase the investment in the
BENEFIT sector that would generate tax revenue.

5 – ANNEXURE
(CUSTOMS RELATED)

NOTE: Please use MS-EXCEL Format ONLY
(I) * CHANGE IN CUSTOMS TARIFF RATES Annex-I
Name of Proposing Individual / Existing rate of duty Proposed rate of duty Suggested to be changed through SRO or in
S. No. PCT code Description Proposed PCT code Brief justification/ rationals for Change Quantify benefit to Consumer/ Industry
Association / Chambers 2020-2021 2021-2022 Tariff
MEDICAL DEVICES &

DIGNOSTIC PRODUCTS
(Medical Instruments,
Equipment, Medical Implants,
Higher custom duties and taxes finally become part of the product cost and is in turn charged to the hospitals,
Medical & Surgical
Healthcare Devices Association of Tarrif Rate to be reduced for the Substances resulting in higher treatment expenses. Since Govt Institutions are the major buyers of Medical Devices, the Cost effective supplies made to the Hospital / Healthcare Centers eventually
1 Respective Heading Disposables used by the 0% upto 20% 0% to 5%
Pakistan registered as Medical Devices under Drap Act 2012 government ends up paying higher cost. Lower taxes will reduce overall treatment costs, helping the benefiting the patients.
hospitals, healthcare
government achieve its objective of providing low cost healthcare for our nation..
establishments, individuals
for the purpose of diagnosis,
monitoring, prevention &
treatment).
6813.2010 7014.0010
8301.2010 8409.9110
8413.3040 8421.3110
Smuggling cannot be stopped at borders instead can be completely curb by making
8483.1013 8483.4012
All Pakistan Motorcycle Spare custom duty Tariffs as rational as 20% so that all the goods coming into country
8484.8020 8544.4221 Due to higher custom duties and Taxes total impact on Cost becomes 85.5% which is the main reason for
2 Parts Importers & Dealers Motorcycle spare parts 6813.2010 7014.0010 8301.2010
35% 8409.9110 8413.3040
20% 8421.3110 8483.1013Tariff
8483.4012 8484.8020 8544.4221 8536.5021 8511.2010 8511.3010 8511.8030 8512.2010 8512.3010 8714.1020 8714.1030 8714.1040 8481.8020 through customs can be convert from black economy into documented which is 5
8536.5021 8511.2010 smuggling,underinvoicing,misdeclaration khappe and corruption in the country,
Association Times higher. Countries without smuggling improve the taxes due to lower custom
8511.3010 8511.8030
Tariffs and Taxes
8512.2010 8512.3010
8714.1020 8714.1030
8714.1040 8484.8020
Japanese Ball, Taper,

3 8482.1000 to 8482.8000 Needle, Spherical, Cylindrical 8482.1000 to 8482.8000 11% 5%
Roller Bearings.
China Ball, Taper, Needle,

4 8482.1000 to 8482.8000 Spherical, Cylindrical Roller 8482.1000 to 8482.8000 5% 0
Bearings WITH FTA
High Tariff is only affecting imports and boosting smuggling, affecting genuine imports and reducing revenue to
exchequr. Japan and European origin bearings are already very expensive and high Valuation Ruling affects
Pakistan Automobile Spare Parts Change in Tariff will bring better results, bring smugglers to enter into import regime,
5 5% Our request is to change the duty in Tariff Reduce customer, due to high price, customers shift to low quality bearings and that can be threat to industry and life. In
Importers and Dealers Association 8482.1000 to 8482.8000 OTHERS 8482.1000 to 8482.8000 11% Increase Exchequer's Revenue, Reduce Importer's Cost, and also lead to reduce
to Single digit Abolish AST & ACD order to support industry and end consumer, CD shall be reduced to 5%.
(PASPIDA) price to Customers.
Bearings are not manufactured in Pakistan.
If bearing Valuation is lowered, it will end smugglers' charm and all business will be via legal channel.
6 BEARING PARTS-JAPAN - -
8482.9100, 8482.9910, 8482.9100, 8482.9910,
8482.9990 8482.9990
7 BEARING PARTS CHINA - -
BEARING HOUSING
WITHOUT
8 8483.309 8483.3090 20% 5%
INCORPORATING BEARING-
JAPAN/CHINA
Page 1 of 11
A). Fabric made from Artificial / Synthetic Yarn is used by common man and has become expensive & out
of reach. B).
Rising input costs like utilities and labour is another cause of high costs. A). Our weavers can compete in International Markets. B).
11 % CD + C). High tariff & high Import cost has rendered the exports of Fabric made from Artificial / Synthetic un- Common people will be provided Fabric in the local Market at competitive prices.
9 5402-4600, 5402-4700 Same 7% & No ACD SRO or Tariff
2 % ACD competitive. D). The recent withdrawal of Custom Duty C). Local Textile Industry will be stimulated. D). More jobs
on Cotton and manmade fibers, under SRO 48(1)/2018 was aimed to protect the local fabric industry therefore will be created in the industry
same preference should also be given to the imported Polyester Filament Yarn by a reducing the Custom Duty
to 7%
5202-1000, 5402-1900, A). Fabric made from Artificial / Synthetic Yarn is used by common man and has become expensive & out
5402-2000, 5402-3300, of reach. B).
5402-3400, 5402-3900, Rising input costs like utilities and labour is another cause of high costs. A). Our weavers can compete in International Markets. B).
11 %
5402-4800, 5402-4900, 11 % CD + C). High tariff & high Import cost has rendered the exports of Fabric made from Artificial / Synthetic un- Common people will be provided Fabric in the local Market at competitive prices.
10 Same & No SRO or Tariff
5402-5200, 5509-1100, 2 % ACD competitive. D). The recent withdrawal of Custom Duty C). Local Textile Industry will be stimulated. D). More jobs
ACD
5509-2100, 5509-3200, on Cotton and manmade fibers, under SRO 48(1)/2018 was aimed to protect the local fabric industry therefore will be created in the industry
5509-5100, 5509-5200, same preference should also be given to the imported Polyester Filament Yarn by a reducing the Custom Duty
5509-5300, 5510-1100 to 11%
A). Fabric made from Artificial / Synthetic Yarn is used by common man become expensive & out of reach. A). Our weavers can compete in International Markets.
B). Rising input costs like utilities, Labour is another cause of high costs. B). Common people will be provided Fabric in the local Market at competitive
11 5509-2100, 5509-5100 Same 2% RD 0% RD C). High tariff & high Import cost has rendered the exports of Fabric made from Artificial / Synthetic un- prices. C). Local Textile Industry will be stimulated.
Pakistan Yarn Merchants competitive. D). Polyester Spun Yarn is basic Raw Material for Knitting & Weaving D). More jobs will be created in the industry. E). Positive
Association Industry and there is no reason for imposed 2% RD on basic Raw Material of Spun Yarn. impact on the Current account Trade deficit.
A). Fabric made from Artificial / Synthetic Yarn is used by common man become expensive & out of reach.
B). Rising input costs like utilities, Labour is another cause of high costs.
C). High tariff & high Import cost has rendered the exports of Fabric made from Artificial / Synthetic un- A). Our weavers can compete in International Markets.
competitive. D). Chapter 54 of (Polyester) under H.S. Code 5402-3300 & 5402- B). Common people will be provided Fabric in the local Market at competitive
5402-3300, 2.5%
12 Same 0% RD 4700, 80% requirement of the local weaving & Knitting Industry is met by Chinese & Malaysian suppliers. An prices. C). Local Textile Industry will be stimulated.
5402-4700 RD
average of 7% of Anti Dumping has been imposed by National Tariff Commission since 26.08.2017 for 5 years. D). More jobs will be created in the industry. E). Positive
Now, the duty / tax structure on the import of finish goods (fabrics) is lower than its Raw Material i.e. Polyester impact on the Current account Trade deficit.
Filament Yarn. The entire cascading system of Polyester Chain is destroyed and is discriminatory to the local
fabrics manufacturing industry.
5% Our Fabric made from Viscose generally made for exports. HighTariff rate on Viscose Filament Yarn @ 5% will
13 5403-3100, 5403-3200 Viscose Filament Yarn Same 0% CD
CD make our Industry un-competitive
A). Our weavers can compete in International Markets.

B). Common people will be provided Fabric in the local Market at competitive
5402-3100, 5402-3200, Nylon Filament Yarns of 5% Our Fabric & Sports items made from Nylon. for Example Socks are generally made for exports. HighTariff rate
14 SAME 0% CD SRO/Tariff prices. C). Local Textile Industry will be
5402-4100, 5402.4500 various types CD on Nylon yarn @ 5% will make our Industry un-competitive
stimulated. D). More jobs will be created in the
industry
Rs. 108000 PMT & Rate of Duty 5%, ACD

15 1513.1900 RBD Coconut Oil Primary Raw Material not produced Locally -
Rs. 9720/- (Malaysia) 2%, I.TAX 2%
Rs. 10800 PMT & Rs.

Rate of Duty 5%, ACD
16 1513.2900 RBD Palm Kernel Oil 9180/- (Malaysia & Primary Raw Material not produced Locally -
2%, I.TAX 2%
Indonesia)
11% & 0% Malaysia, Rate of Duty 0%, ACD

17 3823.1920 Palm Acid Oil Primary Raw Material not produced Locally -
5% Indonesia 2%, I.TAX 2%
Pakistan Soap Manufacturers Palm Kernel Fatty Acid

16% & 0% Malaysia, Rate of Duty 5%, ACD
18 Association 3823.1990 Distillate / Palm Kernel Acid Primary Raw Material not produced Locally -
5% Indonesia 2%, I.TAX 2%
Oil
Coconut Fatty Acid Distillate / 16% & 0% Malaysia, Rate of Duty 5%, ACD
19 3823.1930 Primary Raw Material not produced Locally -
Coconut Acid Oil 5% Indonesia 2%, I.TAX 2%
Mixture of Odoriferous Rate of Duty 5%, ACD

20 3302.9090 11% & 5% SAARC Primary Raw Material not produced Locally -
Substance/Fragrance 2%, I.TAX 2%
21 1511.9010 Palm Stearin 5% 0% Stearic Acid/ Distilled Fatty Acid (DFA)
Page 2 of 11
Omedon;e Vegetables or This entry may be

22 1518.0000 15%
Animal Oils & Fats deleted
Pakistan Soap Manufacturers
Association
23 1511.9010 Palm Stearin Rs. 9,050 PMT 5% Toilet Soap
24 PAKISTAN TEA ASSOCIATION 902.402 BLACK TEA 902.402 11+2 (%) 5(%) TARIFF SAME LEVEL PLAYING FIELD FOR THE WHOLE INDUSTRY. AND TO STOP SMUGGLING ACTIVITIES ENSURES PERFECT COMPETITON AND INCREASES IN GOVT. REVENUE
SECONDARY HOT ROLLED

25 7225.3 7225.3000 11% 0% TARIFF
ALLOY STEEL
PRIME HOT ROLLED

26 7225.3 7225.3000 11% 0% TARIFF
ALLOY STEEL

27 7208.101 7208.1010 6% 0% TARIFF
STEEL
28 7208.109 PRIME HOT ROLLED STEEL 7208.1090 6% 0% TARIFF

29 7208.251 7208.2510 6% 0% TARIFF
STEEL

31 7208.261 7208.2610 6% 0% TARIFF
STEEL
SECONDARY HOT ROLLED Imposition of regulatory duty on all imports irrespective of the importer status and
33 7208.271 7208.2710 6% 0% TARIFF abolition of above mentioned SRO’s will generate revenue of about PKR 100 billion
STEEL
which currently accounts for a big loss as this relief is given to few entities only, such
type of duty was not levied even when Pakistan Steel Mills Corporation (PSMC) was
In the Finance Act 2020 regulatory duty was reduced of Hot Rolled Alloy Steel from 17.5% to 11% HS code
34 7208.279 PRIME HOT ROLLED STEEL 7208.2790 6% 0% TARIFF operational i.e. duty protection is there for private sector industries only, however
7225.3000 and Hot Rolled Non Alloy Steel from 12.5% to 6% HS code 7208 but on 7209 Cold Rolled Steel and
such a benefit was never given to national corporations and industries.
7210 Galvanized and other coated steel there was no reduction made, however all of these of industrial raw
On the other hand, if this is completely removed on all items, the raw material cost
materials as no steel can be used in the imported form unless or until it is further processed in an industry using
KARACHI IRON & STEEL SECONDARY HOT ROLLED for the industry would reduce to much extent, which would benefit the construction
35 7208.361 7208.3610 6% 0% TARIFF machineries. Most of these imported not produced locally have RD imposed on it, however they are
MERCHANTS ASSOCIATION STEEL sector as well as many other sectors and our exporters would also benefit from it as
not luxurious/non-essential items, moreover only 3-4 entities are given relief of the same under SRO.
their cost of production would reduce.
565(I)/2006 & its amendment via SRO. S.R.O.606(I)/2015, namely International Steels Limited, Aisha Steel Mills
The importers of such materials whether on industrial or commercial basis sector,
36 Limited and Hadeed Pakistan Ltd, which causes billions of losses to national exchequer every financial year, it is
7208.369 PRIME HOT ROLLED STEEL 7208.3690 6% 0% TARIFF both will get a treatment of equality as this has also given industrial importers an
therefore proposed to be removed on all imports, if not, it should be imposed on those whom are given relief.
edge over commercial importers which also causes loss to the national reserve, as
after all steel imported goes into the industry at first stage before being utilized
SECONDARY HOT ROLLED anywhere.
37 7208.371 7208.3710 6% 0% TARIFF
STEEL

39 7208.381 7208.3810 6% 0% TARIFF
STEEL

41 7208.391 7208.3910 6% 0% TARIFF
STEEL

43 7208.401 7208.4010 6% 0% TARIFF
STEEL

45 7208.511 7208.5110 6% 0% TARIFF
STEEL
Page 3 of 11

47 7208.521 7208.5210 6% 0% TARIFF
STEEL

49 7208.531 7208.5310 6% 0% TARIFF
STEEL

51 7208.541 7208.5410 6% 0% TARIFF
STEEL

53 7208.901 7208.9010 6% 0% TARIFF
STEEL
SECONDARY COLD
55 7209.151 7209.1510 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

56 7209.159 7209.1590 5% 0% TARIFF
STEEL
SECONDARY COLD
57 7209.161 7209.1610 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

58 7209.169 7209.1690 5% 0% TARIFF
STEEL
Imposition of regulatory duty on all imports irrespective of the importer status and
abolition of above mentioned SRO’s will generate revenue of about PKR 100 billion
SECONDARY COLD which currently accounts for a big loss as this relief is given to few entities only, such
59 7209.171 7209.1710 5% 0% TARIFF
ROLLED STEEL type of duty was not levied even when Pakistan Steel Mills Corporation (PSMC) was
operational i.e. duty protection is there for private sector industries only, however
7225.3000 and Hot Rolled Non Alloy Steel from 12.5% to 6% HS code 7208 but on 7209 Cold Rolled Steel and
such a benefit was never given to national corporations and industries.
7210 Galvanized and other coated steel there was no reduction made, however all of these of industrial raw
PRIME COLD ROLLED On the other hand, if this is completely removed on all items, the raw material cost
60 7209.179 7209.1790 5% 0% TARIFF materials as no steel can be used in the imported form unless or until it is further processed in an industry using
KARACHI IRON & STEEL STEEL for the industry would reduce to much extent, which would benefit the construction
machineries. Most of these imported not produced locally have RD imposed on it, however they are
MERCHANTS ASSOCIATION sector as well as many other sectors and our exporters would also benefit from it as
not luxurious/non-essential items, moreover only 3-4 entities are given relief of the same under SRO.
their cost of production would reduce.
565(I)/2006 & its amendment via SRO. S.R.O.606(I)/2015, namely International Steels Limited, Aisha Steel Mills
SECONDARY COLD The importers of such materials whether on industrial or commercial basis sector,
61 7209.181 7209.1810 5% 0% TARIFF Limited and Hadeed Pakistan Ltd, which causes billions of losses to national exchequer every financial year, it is
ROLLED STEEL both will get a treatment of equality as this has also given industrial importers an
after all steel imported goes into the industry at first stage before being utilized
PRIME COLD ROLLED anywhere.
62 7209.189 7209.1890 5% 0% TARIFF
STEEL
SECONDARY COLD
63 7209.251 7209.2510 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

64 7209.259 7209.2590 5% 0% TARIFF
STEEL
SECONDARY COLD
65 7209.261 7209.2610 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

66 7209.269 7209.2690 5% 0% TARIFF
STEEL
SECONDARY COLD
67 7209.271 7209.2710 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

68 7209.279 7209.2790 5% 0% TARIFF
STEEL
SECONDARY COLD
69 7209.281 7209.2810 5% 0% TARIFF
ROLLED STEEL
PRIME COLD ROLLED

70 7209.289 7209.2890 5% 0% TARIFF
STEEL
SECONDARY COLD
71 7209.901 7209.9010 5% 0% TARIFF
ROLLED STEEL
Page 4 of 11
PRIME COLD ROLLED

72 7209.909 7209.9090 5% 0% TARIFF
STEEL
SECONDARY GALVANIZED
73 7210.111 7210.1110 5% 0% TARIFF
AND OR COATED STEEL
PRIME GALVANIZED AND

74 7210.119 7210.1190 5% 0% TARIFF
OR COATED STEEL
75 7210.121 7210.1210 5% 0% TARIFF
AND OR COATED STEEL

76 7210.129 7210.1290 5% 0% TARIFF
OR COATED STEEL
77 7210.201 7210.2010 5% 0% TARIFF
AND OR COATED STEEL

78 7210.209 7210.2090 5% 0% TARIFF
OR COATED STEEL
79 7210.301 7210.3010 5% 0% TARIFF
AND OR COATED STEEL

80 7210.309 7210.3090 5% 0% TARIFF
OR COATED STEEL
Imposition of regulatory duty on all imports irrespective of the importer status and
SECONDARY GALVANIZED abolition of above mentioned SRO’s will generate revenue of about PKR 100 billion
81 7210.411 7210.4110 5% 0% TARIFF
AND OR COATED STEEL which currently accounts for a big loss as this relief is given to few entities only, such
type of duty was not levied even when Pakistan Steel Mills Corporation (PSMC) was
operational i.e. duty protection is there for private sector industries only, however
PRIME GALVANIZED AND 7225.3000 and Hot Rolled Non Alloy Steel from 12.5% to 6% HS code 7208 but on 7209 Cold Rolled Steel and
82 7210.419 7210.4190 5% 0% TARIFF such a benefit was never given to national corporations and industries.
OR COATED STEEL 7210 Galvanized and other coated steel there was no reduction made, however all of these of industrial raw
On the other hand, if this is completely removed on all items, the raw material cost
materials as no steel can be used in the imported form unless or until it is further processed in an industry using
KARACHI IRON & STEEL for the industry would reduce to much extent, which would benefit the construction
machineries. Most of these imported not produced locally have RD imposed on it, however they are
MERCHANTS ASSOCIATION sector as well as many other sectors and our exporters would also benefit from it as
SECONDARY GALVANIZED not luxurious/non-essential items, moreover only 3-4 entities are given relief of the same under SRO.
83 7210.491 7210.4910 5% 0% TARIFF their cost of production would reduce.
AND OR COATED STEEL 565(I)/2006 & its amendment via SRO. S.R.O.606(I)/2015, namely International Steels Limited, Aisha Steel Mills
The importers of such materials whether on industrial or commercial basis sector,
Limited and Hadeed Pakistan Ltd, which causes billions of losses to national exchequer every financial year, it is
both will get a treatment of equality as this has also given industrial importers an
PRIME GALVANIZED AND after all steel imported goes into the industry at first stage before being utilized
84 7210.499 7210.4990 5% 0% TARIFF
OR COATED STEEL anywhere.
85 7210.501 7210.5010 5% 0% TARIFF
AND OR COATED STEEL

86 7210.509 7210.5090 5% 0% TARIFF
OR COATED STEEL
87 7210.611 7210.6110 5% 0% TARIFF
AND OR COATED STEEL

88 7210.619 7210.6190 5% 0% TARIFF
OR COATED STEEL
89 7210.691 7210.6910 5% 0% TARIFF
AND OR COATED STEEL

90 7210.699 7210.6990 5% 0% TARIFF
OR COATED STEEL
91 7210.702 7210.7020 5% 0% TARIFF
AND OR COATED STEEL

92 7210.709 7210.7090 5% 0% TARIFF
OR COATED STEEL
93 7210.901 7210.9010 5% 0% TARIFF
AND OR COATED STEEL

94 7210.909 7210.9090 5% 0% TARIFF
OR COATED STEEL
Page 5 of 11
Customs Duty 11%, if this item also used by other sectors then it should be included in FIFTH
95 2915.2100 Acetic Acid 5% To reduce the cost of manufacturing of Textile Industry
Add. Cus. Duty 2%, SCHEDULE TO THE CUSTOMS ACT 1969 for textile sector
Disperse dyes and Customs Duty 16%,

96 3204.1100 5% -do- -do-
preparations based thereon Add. Cus. Duty 4%,
97 3204.1590 Other VAT Dyes 5% -do- -do-
Reactive dyes and Customs Duty 16%,

98 3204.1600 5% -do- -do-
preparations based thereon Add. Cus. Duty 4%,
Customs Duty 16%,

99 3204.1710 Powdered (Pigments) 5% -do- -do-
Add. Cus. Duty 4%,
Pakistan Hosiery Manufacturers &
Exporters Association (PHMA)
Customs Duty 16%,

100 3204.1720 Liquid (Pigments) 5% -do- -do-
Add. Cus. Duty 4%,
Other (KNITTING MACHINE Customs Duty 20%, Knitting machine oil is used in knitwear export sector. Considering Knitwear Garment industry as one of top if this item also used by other sectors then it should be included in FIFTH
101 2710.1999 3%
OIL or NEEDLE SINKER OIL) Add. Cus. Duty 7%, value addition sector. Please note the duty on import of spin oil used by spinning sector is 3 %. SCHEDULE TO THE CUSTOMS ACT 1969 for textile sector
Watertube boilers with a

Customs Duty 20%, If import allowed on 0% duty, industrialist can import new boilers which are more efficient and save precious if this item also used by other sectors then it should be included in FIFTH
102 8402.1200 steam production not 0%
Add. Cus. Duty 7%, resources SCHEDULE TO THE CUSTOMS ACT 1969 for textile sector
exceeding 45 t per hour
Electric generating sets and

rotary converters (of an Customs Duty 16%,
103 8502.1310 0% -do- -do-
output exceeding 375 kVA Add. Cus. Duty 4%,
but not exceeding 1100 kVA)
DFB GYPSUM INDUSTRIES 6 Million SQ Mtr.6, LODHIA GYPSUM INDUSTRIES

PVC Textured Film Rate Of Customs Duty on PVC Textured Film
Rates of Duty on Intermediary goods is CD 20% and Rate of Duty on Finish Product under FTA is 6.25%. (PVT.) LTD. Million SQ Mtr.6 , UNITED GYPSUM INDUSTRIES (PVT.) LTD.
104 3920.43 (Embossed ) Assorted No Changes Required 20% 3% (Embossed) Assorted Colors And Design should be
Cascading Principle of Duty Structure has been ignored Lost Market Shares in Local and Globally. Million SQ Mtr. 12
Colors And Design 3%
Country Demand 12 Million SQM, Million SQ Mtr.
DFB Gypsum Industries
DFB GYPSUM INDUSTRIES 6 Million SQ Mtr.6, LODHIA GYPSUM INDUSTRIES
Rate Of Customs Duty on Gypsum Celing Tiles Rates of Duty on Intermediary goods is CD 20% and Rate of Duty on Finish Product under FTA is 6.25%. (PVT.) LTD. Million SQ Mtr.6 , UNITED GYPSUM INDUSTRIES (PVT.) LTD.
105 6809.19 Gypsum Ceiling Tiles No Changes Required 6.25% 25%
should be 25% Cascading Principle of Duty Structure has been ignored Lost Market Shares in Local and Globally. Million SQ Mtr. 12
Country Demand 12 Million SQM, Million SQ Mtr.
Customs Duty 16%,

Add. Cus. Duty 4%,
106 2915.1100 Formic Acid 2915.1100 Sales Tax 17%, Add. 0% Increase in Exports Cost of Raw Material Decrease
Sales Tax 3%, Income
Tax 2%
Makda Enterprise Sales Tax 17%, Add.

Dithionites of sodium (Sodim 0% of Sales Tax &
107 2831.1010 2831.1010 Sales Tax 3%, Income Increase in Exports Cost of Raw Material Decrease
Hydrosulphite) Income Tax
Tax 2%
Sales Tax 17%, Add.

Sodium sulphites: --- Other 0% of Sales Tax &
108 2832.1090 2832.1090 Sales Tax 3%, Income Increase in Exports Cost of Raw Material Decrease
(Sodium Metabisulphite) Income Tax
Tax 2%
Page 6 of 11
Our export sector will benefit with reduced duty rates and local industry for school bags, tents will start relying on
109 5903 COATED MATERIAL 20% 11% TARIFF imported goods rather than purchasing cheap smuggled material available in market. Also this will create many AVERAGE 250000 KGS IMPORT IN MONTHLY BASIS
jobs as local made goods will be able to subtitute imported finished school bags.
TABBA TEX / KARACHI LINING
COATED
Our Export garments (Leather and Jackets) sector will benefit with reduced duty rates and local industry for
110 5407.61 LINING MATERIAL 16% 11% TARIFF leather coats, overcoats and Jackets will start relying on imported goods rather than purchasing cheap AVERAGE 120000 KGS IMPORT IN MONTHLY BASIS
smuggled material available in market.
Cable Filling / Flooding

111 3824.9999 CD 5% & ACD 2% 0%
Compound
112 3907.7000 Polybutylene Terephthalate CD 5% & ACD 7% 0%
Fiber Reinforced If local industry will get the support by lowering the custom duties for local manufacturers, cable industry has
113 Premier Cables 3916.9000 Plastic/Glass Reinforced CD 5% & ACD 7% 0% potential to cater all the IT / Telecom requirements saving the valuable foreign exchange and increasing the
Polypropylene exports. With this support for domestic industry we can substitute the imports.
Water Blocking/ Swelling

114 5604.9000 CD 5% & ACD 2% 0%
Tapes
Single Model/ Multi Mode

115 9001.1000 CD 5% & ACD 7% 0%
Optical
Page 7 of 11
(II) CHANGES IN RULES/PROCEDURES Annex - II
Name of Proposing Individual / Brief Justification/ Rationale for Proposed Change, if any, required in the Act, other
S. No. Existing rules/procedures alongwith SRO/CGO No & date Suggested Change Position after suggested Change
Association / Chambers Change SRO or Rules to Implement this Proposal
Rates of Duty on Intermediary goods is CD 20% and Rate of

SRO 680(I)2019/2806 2019 S.No 253,254 Rate of Regulatory Duty is Duty on Finish Product under FTA is 6.25%. Cascading Change required to implement through Amendment
1 DFB Gypsum Industries
10% in column 4.
Rate of RD may be changed to 40% SNO.253 & No.254 Rate of RD in column 4 ,40%
Principle of Duty Structure has been ignored Lost Market in the SRO 680(I)2019/2806.2019
Shares in Local and Globally
SRO 450(I) 2001/18-June-2001: Chapter XII; Sub Chapter 7. Duty and The input goods acquired under this sub-chapter shall be utilized in the manufacture and export
Tax Remission for Export.Rule these are cumbersome .These need to be of output goods within Twenty four months from the date of approval of DTRE application or IGM
Rule No 305 may be amended. Utilization period
simplified. All the whole process needs to made on line, including date,which ever is later.Provided that the ulilization period of packaging materials for horticulture Utilization period of twelve months is very short,in view of
of inputs may be restored to two years as SRO.450 (I) 2001/18th June 2001, in S.No
2 DFB Gypsum Industries application of DTRE, its approval input Output ratio determination ,and
before.Processes of Rule 300,301,302,303,304
products shall be Twenty four months.Provided further that the said period may be extended by dharnas,strikes, lockouts, long festival hoildays and
300,301,302,303,304,305.
submission of documents after utilization of materials in exports,release the Chief Collector of respective jurisdication in case of exceptional circumstances and in case Saturdays closures.
may be made on line and may be time bound.
of security deposit for DTRE approval. All the processes may be time of extension such fresh securities as mentionedin rule 300 covering the exxtension period shall
bound. be obtained.
Motorcycle Parts are not Luxury items and should be at

minimum level of taxes, consumers are lower class, Higher
All Pakistan Motorcycle Spare Parts SRO 484(1)/2016 Additional duty on motorcycle spare parts should If all the Goods coming into country through customs then the revenue will be increased by many
3 Importers & Dealers Association Dated: 29th June,2016 be with drawn folds
Tariff encourage
Smuggling,Underinvoicing,Khappe and develop un
documented economy.
IMPORTER IS ALREADY PAYING HEAVY TAXES, AND THIS ACTIVITY IS NOT AN OFFICAL LAW BY
INV.ATTESTATION CHARGES GONE IN THE POCKETS THE GOVT. OF PAKISTAN. SO IT SHOULD BE
4 PAKISTAN TEA ASSOCIATION INVOICE ATTESTATION IT SHOULD BE REMOVE EASE IN CUSTOM CLEARENCE
OF PAK. CONSULATE IN KENYA WHICH THEY MIGHT REMOVE TO AVOID CORRUPTION AND
NOT SHOWED TO PAKISTAN GOVT. MALPRACTICES.
ALL THE EXEMPTION RELATED SRO'S FOR

SUCH COMPANIES AVAILS INCOME TAX/SALES TAX MANUFACTURERS/RE-EXPORTERS/ECONOMIC
BENEFIT AT THE IMPORT STAGE BY SHOWING ZONES/EXEMPTED AREAS SHOULD BE
INCOME TAX EXEMPTIONS TO MANUFACTURERS/RE
INDUSTRIAL USAGE BUT SELL IN LOCAL MARKETS REVISED OR BANNED FOR TEA INDUSTRY AND
5 PAKISTAN TEA ASSOCIATION EXPORTERS/FATA/PATA/GILGIT/ AZAD KASHMIIR SRO 1212/19, SHOULD BE BANNED HELPS IN INCREASING GOVT REVENUE
WHICH CAUSES HUGE LOSS TO GOVT REVENUE AND MAKE ONE POLICY IN SUCH A MANNER THAT
561/91
FORCE COMM. IMPORTERS TO IMPORT ON THEIR WILL HELPS IN BLOCKING REVENUE LEAKAGE
LICENSES. AND MAKE BALANCE FOR COMM. IMPORTERS
OF THE COUNTRY AS WELL.
Page 8 of 11
(III) CHANGES IN CUSTOMS ACT, 1969 Annex - III
Name of Proposing Individual /

S. No. Existing Section / Clause of the Act requiring amendment Suggested Amendment Position after suggested Change Brief Justification/ Rationale for Proposed Change Impact, if any, on any SRO/ Rules
Association / Chambers
(Customs Agent Licensing ) SRO 450, (I) /2001 Dated 18-06-2001 Presently, more than 3100 Licences have been issued by the Licensing MCC-
It is suggested that certificate of participation in mandatory course may be issued by the Rule 96 (d) Certificate of participation (onces in every two years or onces
Rule , 96 of Chapter VIII (d) Certificate of participation (onces in every two years) in A (West) and it is quite difficult to carry out Six Days Mandatory course due
1 DGT once in every two years or once in every five years subject to the renewal period of in every five years) in mandatory course from Directorate General of As per Rule 95(10) license are renewed for two years as well as five years.
mandatory course from Directorate General of Training and Reasearch (Customs , Sales for all customs agents licensed by MCC with in stipulated time because DGTR
licences. Training and Reasearch (Customs , Sales Tax,and Federal Excise).
Tax,and Federal Excise). is also engaged in other activities of training of staff.
DFB Gypsum Industries

Amendment may be made in section 25-A of the Customs Act, 1969 to issue Valuation
Ruling within 60 days of the receipt of the application from importers. All the prices are
Issuance of Valuation Ruling under section 25-A of the Customs Act, 1969 takes a very long Valuation Ruling will be issued within 60 days of the receipt of the Trade and industry suffer due to delay in issuance of Valuation Ruling on account fast Goods will be assessed to Customs Duty & Taxes on the basis of prevailing
2 available on net. Moreover, China and Pakistan have agreed to share data of import and
time. There is no time limit. apprication from importers. changing market prices. prices, benefiting the importers as well as the government.
export prices.Directorate of Customs Valuation to remain open on Saturdays. This will help
reduce the back log and facilitate trade and industry.
It is requested that proviso of para 3 of Section 32 of Customs Act 1969 may kindly be
In proviso of para 3 o f Section 32 of Customs Act 1969 (IV of 1969) Provided that if the Provided that if the recoverable amount in case is less than one hundred
considered to be amended, as no action shall be taken against the trader (importer / Keeping in view the devaluation of Pak rupees and current rate of inflation twenty
3 recoverable amount in case is less than twenty thousand rupees the custom authorities shall thousand rupees the custom authorities shall not initiate the aforesaid
exporter) if recoverable amount of duty and taxes is not more than 100,000.00 (one thousand rupees has less significance.
not initiate the aforesaid action. action.
hundred thousand only)
[Provided that, before filing of goods declaration, the owner makes a

Proviso of para 1 Section 79 of Customs Act, 1969. [Provided that if, in case of used goods, As per KYOTO Convention of WCO guidelines Standard 3.9 "Before lodging the goods
request to an officer of customs not below the rank of an Additional
before filing of goods declaration, the owner makes a request to an officer of customs not declaration the declarant shall be allowed, under such conditions as may be laid by the
Collector that he is unable, for want of full information, to make a correct
below the rank of an Additional Collector that he is unable, for want of full information, to Under Section 79 of Customs Act, 1969 It is suggested that all kinds of goods may also be customs: (a) to
and complete declaration of the goods, then such officer subject to such
4 make a correct and complete declaration of the goods, then such officer subject to such allowed for prior examination in addition to used goods for true declaration and trade inspect the goods; and (b) to
conditions as he may deem fit, may permit the owner to examine the
conditions as he may deem fit, may permit the owner to examine the goods and thereafter facilitation draw samples
goods thereafter make entry of such goods by filing a goods declaration
make entry of such goods by filing a goods declaration after having assessed and paid his Keeping in view of the above guidelines weighment / examination before filing of goods
after having assessed and paid his liabilities of duties, taxes and other
liabilities of duties, taxes and other charges:] declaration may be allowed for all class of goods.
charges:
Due to the current nature of business environment and very high tariff of ports,
In para 3 of Section 179 of Customs Act The cases shall be decided within
In para 3 of Section 179 of Customs Act 1969 (IV of 1969) The cases shall be decided within terminals and shipping companies if a case is not decided within 30 days and the goods
It is requested that the period specified to decide the cases should be thirty working days thirty working days of the issuance of show cause notice or within such
ZAHID BASHIR CHOUDHRY Ninety days of the issuance of show cause notice or within such period extended by the are lying in the port area the cost of doing business will significantly increase. An
5 instead of existing period i.e. 90 days and further the extended period should be 15 days period extended by the collector for which reason shall be recorded in
collector for which reason shall be recorded in writing, but such extended period shall in no estimated cost Rs.15000 to 20000 per day can be incurred on a single 40ft container.
instead of existing 60 days. writing, but such extended period shall in no case exceed fifteen working
case exceed sixty days Therefore to reduce the cost of doing business and trade facilitation the cases should be
days
decided within 15 working days.
In Section 203 of Customs Act 1969 (IV of 1969) Wharfage or Storage fees: Currently all terminal operators are charging wharfage and storage fees after 05
Wharfage or Storage fees: The collector of custom may from time to time fix the period after the calendar days from the berthing of vessel, which is indeed a huge loss of foreign
The collector of custom may from time to time fix the period after the expiration of which expiration of which goods left in any custom -house, custom area, wharf or exchange because almost all of the container terminal operators are foreign entities.
Rules may be drafted and then must be notified in SRO 450(I)2001 to govern the section
6 goods left in any custom -house, custom area, wharf or other authorized landing place or other authorized landing place or part of the custom-house premises, shall Further due to law and order situation / COVID-19 pandemic and other holidays,
203 of Customs Act 1969.
part of the custom-house premises, shall be subject to payment of fees, and the amount of be subject to payment of fees, and the amount of such fees in accordance sometimes the consignments are not lifted from the terminals within 05 days hence
such fees.{As provided under the rules prescribed by the board}. with the rules. Collector of Customs may be empowered to notify the free period of storage fees from
time to time under Section 203 of Customs Act
It is to identify that silicon is a naturally occurring chemical element, whereas silicone is

Attention is invited to heading 3214 specially covering sealants in 1st Schedule of Customs a synthetic substance And further as defined in HSEN 2017 the item falling under this
7 Word SILICON should be substituted with the word SILICONE. 3214.9010 - - - SILICONE SEALANT
Tariff under sub heading 3214-9010 SILICON – SEALANT. sub heading is SILICONE SEALANT, therefore kindly substitute the word to SILCONE
instead of SILICON.
Page 9 of 11
Name of Proposing Individual /
S. No. Existing Section / Clause of the Act requiring amendment Suggested Amendment Position after suggested Change Brief Justification/ Rationale for Proposed Change Impact, if any, on any SRO/ Rules
Association / Chambers
-Other furniture (chests, cabinets, displayed counters, show-cases and the

A new sub-heading 8418.5010 and 8418.5090 should be created in order to specify
In the 1st Schedule of Customs Tariff PCT code 8418.5000 for other furniture (chest, like) for storage and display, incorporating refrigerating or freezing
refrigerating equipment and the like used for laboratory, medical, Pharmaceuticals and
8 cabinets, display counter, showcases and the like) for storage and display incorporating A new sub-heading 8418.5010 and 8418.5090 should be created. equipment. 8418.5010:- - -Refrigerating equipment and the like used for
blood banks. The rate of duty should be at the minimum level without the addition of
refrigerating or freezing equipment attracts rate of duty 20% and regulatory duty 40%. laboratory, medical, Pharmaceuticals and blood banks. 8418.5090: - - -
regulatory. This would be beneficial for health care service providers.
Others
st
In the 1 Schedule of Customs Tariff Laptop computer, notebooks and Personal Such as 8471.3011 - - - -Laptop computers, notebooks whether or not
9 Computers and specified under PCT code 8471.3010 and 8471.3020. In order to clear A separate PCT code is should be created for computers with or without SIM card incorporating multimedia kit. 8471.3012 - - - - with sim card functionality. NOC from PTA should not be required for Laptop, notebooks and personal computer
the goods from Customs under said HS codes an NOC is required from Pakistan functionality. 8471.3021 - - - - Personal Computer. 8471.3022 - - - - with sim card that are not equipped with SIM card functionality.
Telecommunication Authority (PTA). functionality
As per HSEN 2017 ambulances are defined under para (2)(b) of Hs code 87.03 page #
st XVII-8703-2. Therefore a new sub-heading may be created in Pakistan Custom Tariff i.e.
10 In the 1 Schedule of Customs Tariff no PCT code is specified for Ambulance. Insertion of new PCT code for ambulance under main heading of 87.03. PCT code 8703.9010
8703.9010. Since Ambulances are used for welfare purpose hence custom duty at the
rate of 5% is proposed.
Condition IV of the preamble of Part 1 of the 5th Schedule of Custom ACT “For "Respective
This condition is confusing because it does not apply to tariff headings which already have
ZAHID BASHIR CHOUDHRY Headings" entries in column (3) of the Table against which more than one rate of customs This condition is confusing because it does not apply to tariff headings which already
3% statutory rate of custom duty. Hence only one rate of custom duty should be Condition IV of the preamble of Part 1 of the 5th Schedule of Custom ACT
11 duty has been mentioned in column (4), the rate of 0%, 3% or 11% shall be applicable only th
have 3% statutory rate of custom duty for example serial # 3,4,5 etc. have more than
mentioned against serial numbers of the 5 schedule for tariff headings where more should be omitted th
for such goods which are chargeable to 3% or 11% duty under the First Schedule to Customs one rate of customs duty mentioned in the 5 schedule.
than one rate of custom duty is mentioned.
Act, 1969.”
In 5TH Schedule Part 1 Table S.No. 22 sub serial (i), SMD/ LED/LVD Lights with or without PCT Code 9405-1030 is also related with light fittings with LED/SMD lights therefore
12 One more PCT code should be inserted i.e. 9405.1030 9405.103
Ballasts, fittings and fixtures are given the benefit of 5th Schedule. should be inserted in 5TH Schedule Part 1 Table S.No. 22 sub serial (i) as per tariff.
In 5TH Schedule Part 1 Table S.No. 22 sub serial (ii), SMD/ LED/LVD Lights with or without PCT Code 9405-4020 is also related with light fittings with LED/SMD lights therefore
13 One more PCT code should be created i.e. 9405.4020. 9405.402
Ballasts, PV module fittings and fixtures are given the benefit of 5th Schedule. should be inserted in 5TH Schedule Part 1 Table S.No. 22 sub serial (ii) as per tariff.
In 5TH Schedule Part 2 Table B S.No. 13, (i) Dextrose Pharmaceutical Grade and
In 5TH Schedule Part II Table B S.No. 13 duty is 5% and in the 5TH Schedule Part II Table
(ii) Dextrose (injectable) PCT code 1702.3000 attracting duty 5%.
14 Both tables of Part II of 5th Schedule i.e. Table B and C needs synchronization C S.No. 01 duty is 10% . This creates a disparity between tables of the same schedule for
However In 5TH Schedule Part 2 Table C S.No. 01, Dextrose (injectable grade and pharma
the same goods
grade) PCT code 1702.3000 is attracting duty 10%.
Add. Custom Duty Has Been Imposed On Tea From Past 12-14 Years. A.C.D/R.D Is
Usually Imposed For Temporary Purpose But On Tea It Was Never Lift Up Or Reduced
Increase in Govt. Revenue / Reduction in Retail Price for Consumer/ Helps Lowers Retail Prices For Consumers With Availability Of Good Quality. Give
15 PAKISTAN TEA ASSOCIATION Add Custom Duty (RD) Should Be Lift Up From Past Several Years. It Will Help Tea Industry To Flourish And Reduce In Price For
in Job Creation Relief To Traders And Packers And Creates Jobs
Consumers. As It Is a Common Man Drink So It Should Be Considered As Essential
Element of Our Nation
Page 10 of 11
2. Details of Imported Raw Materials:
Annual Qty. Cost/ Unit of Production as % of total C & F Value in Rate of Customs If Imported Under any SRO
S. No. Input material's Description PCT Head UOM Qty/Unit Produced Rate of Sales Tax Other Duties & Taxes Alternative use of this item, if any
Consumed cost of Input Material USD/ Rs. Duty
SRO No. Duty (%)
COATED MATERAIL 5903 KG 250000 USD3.1 20 17 ACD7+AST3+IT5.5
Tabba Tex
LINING MATERIAL 5407.61 KG 120000 USD 1.8 16 17 ACD4+RD4+AST3+IT5.5
Un-Coated Woodfree A-4 4802.56 KGS 0.62 USD 850 0.2 0.17 0.155 Photocopies,Leaflets
Un-Coated woodfree Rolls 4802.699 KGS 0.62 USD 770 0.2 0.17 0.155 Books,Copies & Brochures
Un-Coated woodfree Sheets 4802.57 KGS 0.62 USD 800 0.2 0.17 0.155 Books,Copies & Brochures
Packaging box , Magazine Cover

Pakistan Paper Merchant 2/S Coated Board 4810.199 KGS 0.62 USD 800 0.2 0.17 0.155
,Magazines
Association
2/S Coated writing Paper 4810.191 KGS 0.62 USD 780 0.2 0.17 0.155 Magazine , Books
Packaging Board 4810.92 KGS 0.62 USD 750 0.2 0.17 0.155 Foodgrade Boxes , Export Materisal
Packaging Board 4810.99 KGS 0.62 USD 750 0.2 0.17 0.155 Foodgrade Boxes , Export Materisal
Self Adhesive Sticker 4811.41 KGS 0.62 USD--- 0.2 0.17 0.155 Printer Sticker
Page 11 of 11

KCCI's Proposals For Federal Budget 2021-22 (Draft For Approval) FEB 20, 2021 With Annexure

Uploaded by

Copyright:

Available Formats

KCCI's Proposals For Federal Budget 2021-22 (Draft For Approval) FEB 20, 2021 With Annexure

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

KCCI's Proposals For Federal Budget 2021-22 (Draft For Approval) FEB 20, 2021 With Annexure

Uploaded by

Copyright:

Available Formats

KARACHI CHAMBER OF COMMERCE & INDUSTRY

PREAMBLE – PROPOSALS FOR FEDERAL BUDGET 2020-21

M. SHARIQ VOHRA SAQIB GOODLUCK SHAMSUL-ISLAM KHAN MOHAMMAD IBRAHIM KASUMBI

KCCI’s Proposals for Federal Budget 2021-22 i

KCCI’s Proposals for Federal Budget 2021-22 ii

1.2 SALES TAX – PROCEDURAL RELATED 10

KCCI’s Proposals for Federal Budget 2021-22

1.4 SALES TAX – LEGISLATION RELATED 20

KCCI’s Proposals for Federal Budget 2021-22

KCCI’s Proposals for Federal Budget 2021-22

4 FEDERAL EXCISE DUTY 53

5 ANNEXURE (CUSTOMS RELATED) 56

KCCI’s Proposals for Federal Budget 2021-22

1.1 SALES TAX – POLICY RELATED

KCCI’s Proposals for Federal Budget 2021-22 1

KCCI’s Proposals for Federal Budget 2021-22 2

KCCI’s Proposals for Federal Budget 2021-22 3

HIGH RATE OF SALES TAX 17%

KCCI’s Proposals for Federal Budget 2021-22 4

KCCI’s Proposals for Federal Budget 2021-22 5

DISCREPANCY IN SALES TAX REFUND ON FASTER

INPUT TAX DISALLOWED IN SALES TAX RETURN

BENEFIT Taxpayer should not be deprived of its input tax

KCCI’s Proposals for Federal Budget 2021-22 6

KCCI’s Proposals for Federal Budget 2021-22 7

ISSUE NON Filing of return

BENEFIT Unnecessary litigation be reduced

SRO NO. 98(I)/2021

KCCI’s Proposals for Federal Budget 2021-22 8

KCCI’s Proposals for Federal Budget 2021-22 9

KCCI’s Proposals for Federal Budget 2021-22 10

BENEFIT Inconvenience, discrepancies and harassment to tax payer will be avoided.

DISCREPANCIES POINTED OUT IN SALES TAX AUDIT

KCCI’s Proposals for Federal Budget 2021-22 11

DISCREPANCIES POINTED OUT IN TRANSFER OF JURISDICTIONS OF TAXPAYERS

KCCI’s Proposals for Federal Budget 2021-22 12

DIFFICULTIES FOR TIME LIMITATION OF FILING OF ANNEX-H

PROVINCIAL SALES TAX DATA INTEGRATION

KCCI’s Proposals for Federal Budget 2021-22 13

OUTCOME System does not allow adjustment of input tax.

KCCI’s Proposals for Federal Budget 2021-22 14

KCCI’s Proposals for Federal Budget 2021-22 15

KCCI’s Proposals for Federal Budget 2021-22 16

KCCI’s Proposals for Federal Budget 2021-22 17

KCCI’s Proposals for Federal Budget 2021-22 18

SALES TAX ON DAIRY PRODUCTS

KCCI’s Proposals for Federal Budget 2021-22 19

KCCI’s Proposals for Federal Budget 2021-22 20

PROPOSED AMENDMENTS IN SALES TAX SRO

KCCI’s Proposals for Federal Budget 2021-22 21

2.1 INCOME TAX – POLICY RELATED

KCCI’s Proposals for Federal Budget 2021-22 22

KCCI’s Proposals for Federal Budget 2021-22 23

PROPOSAL -WHT ON SUPPLIES OF GOODS AND SERVICES

-WHT ON UTILITY BILLS ETC:

KCCI’s Proposals for Federal Budget 2021-22 24

DISPARITY IN WHT ON MANUFACTURERS & COMMERCIAL IMPORTERS OF YARN

KCCI’s Proposals for Federal Budget 2021-22 25

1. Concept of Minimum Tax and WHT may be abolished.