KARACHI: The Federal Board of Revenue (FBR) has cut the income tax rate for traders and sub-traders of sugar, cement and edible oils to 0.25 percent, sources said Tuesday.
The tax rate was lowered by the promulgation of the Tax Act (amendment) of February 20, 2021 (2021). According to the FBR sources, the tax rate for traders before the change was 1.5 percent.
The reduced tax rate was also extended to wholesalers and retailers. In addition, the concession rate would also cover fertilizers and fast moving consumer goods.
The term “fast moving consumer goods” refers to consumer goods which, in retail marketing, are supplied without durable goods in accordance with the daily demand of a consumer.
According to the sources, the concession would only be available if the dealer and sub-dealer, wholesaler or retailer is already registered under the Sales Tax Act 1990 or registers within sixty days of the promulgation of the 2021 Amending Regulation.
Tax experts from PwC AF Ferguson Chartered Accountants said traders and sub-traders of sugar, cement and edible oils are allowed a minimum tax rate of 0.25 percent under Section 113 of the 2001 Income Tax Regulations, provided they are active taxpayers for the purposes of both the Income Tax Regulations 2001 as well as the sales tax law of 1990.
Every manufacturer or commercial importer of fertilizers is obliged to levy an input tax of 0.7 percent from dealers, dealers and wholesalers in accordance with Section 236G of the Ordinance.
The tax experts said the tax rate would have been lowered to 0.25 percent if the trader / dealer / wholesaler was already registered under the Sales Tax Act 1990 or within sixty days of the promulgation of the amending regulation, 2021, i.e. by April 11th, would register. 2021.
Persons who are registered after April 11, 2021 are subject to input tax of 0.7 percent.
Section 236G tax collection is adjustable for traders, dealers and wholesalers in the specified sectors.
The tax incentive followed the tax demand on sugar mills. The Large Taxpayers Office Karachi created a Rs 500 billion tax claim against sugar mills during an audit. LTO Karachi is responsible for 29 sugar mills. In June of last year, the tax authorities initiated a composite audit of income tax and sales tax of sugar factories.