FBR, PRA pushing industry to pay double tax



KARACHI, DEC 6 – The Friends of Business and Economic Reforms (FEBR) on Sunday called for harmonization between Federal Board of Revenue (FBR) and Punjab Revenue Authority (PRA) with a view to avoid double taxation, as the both tax collecting agencies have started sending notices to the industry to collect the same tax

FEBR President Kashif Anwar said that the FBR and the PRA simultaneously has been pushing the manufacturers to submit ‘toll manufacturing sales tax’ and ‘workers welfare fund’. So, the manufacturers, who have been squeezed between the federal as well as the provincial tax collecting agencies, decided to move the court to avoid the undue burden of double taxation.

He said that the dispute had arisen out of different interpretations of toll manufacturing and workers welfare fund by the FBR and PRA to suit their interests. For example, the FBR considers toll manufacturing a ‘goods producing activity’ and collects sales tax on goods from the manufacturers under the federal Sales Tax Act, 1990 that deals with tax on sale, import, export, production, manufacturing and consumption of goods.

The PRA, on the other hand, classifies the same activity as a ‘service’ and has issued show-cause notices to scores of factory owners for not “withholding and paying 16 per cent provincial sales tax on toll manufacturing” in spite of a clarification by the FBR in January 2016 that it was not a service.

The dispute between the FBR and the PRA on ‘toll manufacturing’ isn’t the only issue adding to the cost of doing business for manufacturers, especially exporters, in Punjab. The PRA is also claiming from them tax on the ‘foreign commission’ exporters pay outside the country and services like insurance they buy from a company based outside Punjab.

Kashif Anwar asked the both tax agencies to create harmonization to facilitate the taxpayers, besides reducing burden of filing extra returns from them.

Moreover, the FEBR President also demanded the tax authorities to extend the date for filing income tax returns for tax year 2020 for another three months till March 2021 in view of resurgence of coronavirus, calculation errors on IRIS portal and newly launched simple return form for small manufacturers.