KATI urged to remove anomalies in finance bill pointed out by auto sector

Staff Reporter –  June 23, 2020

Karachi: President of Korangi Association of Trade & Industry (KATI) Sheikh Umer Rehan has urged the government to remove the anomalies and concerns of automotive sector regarding finance bill 2020, as this was a key sector for economic growth of the country and one of the largest employment providers.

In a statement released by KATI, he said that stack holders of Auto sector has mentioned many concerns and reservation regarding taxes and duties levied on raw material, income, turnover and sales tax those should be heard. “In the current time of crisis due to Covid-19 pandemic and drastic situations faced by industrial sector of the country a comprehensive tax relaxation package should be provided for all the industries” he urged.

Head of KATI’s standing committee on Automotive Ghazanfar Ali Khan said that many anomalies were pointed out by the industry and government should consider them for the survival and growth of auto sector in the country.

“We refer to proposed amendment introduced through Finance Bill 2020 in section 148 of the Income the Ordinance, 2001 whereby the rate of advance income tax @ 2% has been levied on import of such PCT codes of raw material mentioned under part II of Twelfth Schedule. The PCT codes which are not appearing in either part I and Part II are to be charged at 5.5%. The majority PCT codes of materials imported by the auto parts manufacturers (APM’s) for its industrial use are not appearing in either part I or II of the proposed Twelfth Schedule resulting in higher rate of 5.5% tax, which would add to the burden of the industry as the provision related to the Exemption Certificate also stands revoked” he added.

He said that Minimum Tax and Alternative Tax regimes should be abolished, as these are regressive and anti-industry. Without prejudice, minimum tax should not be applied on auto industry during the current period of economic recession. Further, minimum tax should also not be applied on SEZ Zones, where majority of auto industries are located, as this tax is higher than normal tax bemuse of losses/low profitability in the initial years of production. He also urged for the removal of turn over tax and noted that in current situation this would create issue for investment in the sector.

Ghazanfar Ali Khan said that numerous sales taxes on goods and services at varying rates have raised cost of production of auto parts manufacturers to unbearably high levels. “It cause genuine hardships for the auto parts manufacturers and should be eliminated” he added. He also urged that standard rate of sales tax should also be reduced from 17% to 5%, to offset the impact of recession, as these are regressive and anti-industry regimes. He further said that it is requested that the Anomaly Committee to kindly include Auto Parts Industry’s recommendations in the Finance Act 2020.

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