LAHORE - All Pakistan Cement Manufecturars Association, in its budget proposals, has suggested the FBR to reduce Federal Excise Duty (FED) step-wise to zero as announced by the previous government to encourage off-take of cement, which is not a luxury item. In the budget proposals sent to FBR Chairman Muhammad Ali Tabba, chairman of APCMA stated that it’s to be noted that the cement industry is subject to FED at the rate of 5% of retail price and General Sales Tax at the rate of 17% of maximum retail price. These taxes come to around Rs 100 per bag.
“This incidence of high taxation encourages evasion and negatively impacts consumption. The abolishment of excise duty not only eliminates tax evasion but also enhances cement consumption at reduced price,’ he added. He added that certain services are being taxed under independent provincial sales tax laws which are in vogue in Sindh, KP and Punjab. Such services are still taxable under both the Federal Excise Act 2005 as well as under provincial sales tax laws, which tantamount to double taxation. “It is recommended that FED on all services rendered in Sindh, KP or Punjab may be abolished as it would eliminate double taxation and reduce cost of doing business,’ he added.
Similarly, he added, before preferring appeal to the Office of Commissioner (Appeals) or Appellate Tribunal, a taxpayer is required to deposit the impugned duty demanded or penalty imposed in the appealable order. “This mandatory compulsion is considered as a hindrance in the dispensation of justice,” he added.
He said the identical provisions in Income Tax and Sales Tax have already been repealed, therefore, it is suggested that the same should also be removed from the excise law. Moreover, chairman APCMA said, Iranian cement is being flooded into border areas of Balochistan and is being sold at lower prices as compared to locally produced cement due to inferior quality of Iranian cement and its low cost due to export sanctions.
“This phenomenon is very detrimental for local manufacturers and in the longer run can challenge the survival of local industry. Additional regulatory duty should be immediately imposed on imports of Iranian cement and some prior approval mechanism from the government should be in place regarding quality of Iranian cement being imported in Pakistan,” requested chairman APCMA.
He said this regulatory duty is a must to protect the local industry from the influx of Iranian cement. “Also, recent increase in duty on import of coal from 1% to 6% has adversely hit the local manufacturers and has drastically increased cost of doing business,’ he added.