Observer Report Islamabad
Tax offices have highlighted an anomaly in extending concessionary rate of tax or exemption under Section 148 of the Income Tax Ordinance, 2001 to imported goods at customs stage.
Large Tax Offices (LTOs) Islamabad and Karachi pointed out the anomaly and advised the Federal Board of Revenue (FBR) to rectify as taxpayers are suffering.
Large Taxpayers Office (LTO) Karachi in a communication sent to FBR HQ stated that only FBR had powers under Section 148 of the Income Tax Ordinance, 2001 to reclassify goods under Part III of Twelfth Schedule.
The LTO Karachi said that the FBR issued SRO 715(I)/2020 through which Rule 40E was inserted to Income Tax Rules, 2002 and the requirement had been set for the taxpayer desirous of seeking reduced rate certificate on goods classified in Part III of the Twelfth Schedule to the Ordinance.
The LTO Karachi said that even issuance of the rule the commissioner cannot issue reduced rate certificate because there is no statutory or enabling provision in the statute itself (substantive law) for issuance of reduced rate certificate to the goods classified in Part III of the Twelfth Schedule, even if import is being made by the industrial undertaking.
Explaining the background, the LTO Karachi said that before amendment brought in by the Finance Act, 2020, Section 148(7) of Income Tax Ordinance.
