Amin Yousuf Balgamwala, chairman PCDMA & former director of Karachi Stock Exchange has expressed serious concerns over the inclusion of certain industrial raw materials in the category of finished goods in the budget 2020-21 and demanded re-entry of industrial raw materials in Part 2 by maintaining the previous rate of income tax.
In letters sent to Abdul Razzaq Dawood, Advisor to the Prime Minister on Trade and Investment and to the FBR’s Anomaly Committee, chaired by Ashfaq Tola, chairman PCDMA said that there are three parts of Schedule 12 of the Finance Bill 2020.
Part One contains capital goods, Part 2 contains raw materials and Part 3 contains finished goods. Surprisingly, the government has removed several raw materials of chemicals & dyes from Part 2 and inclusion in the Part 3, which is for finished goods.
The income tax rate in Part 3 is 5.5%, while in Part 1 it is 1% and in Part 2 it is 2%. “The raw material of chemicals & dyes was earlier listed in Part 2 but adding many raw materials in Part 3 would result in tax on the raw material in terms of finished goods. The rate of income tax on imported goods has been increased by 3.5% which will exclude to commercial importers from the import business”, he pointed out.
He feared that if previous status of raw material not restored then it will lead to shortage of industrial raw materials and also disrupt the production activities which will ruin the exports. Amin Balgamwala further said that if the manufacturer imports industrial raw materials then the tax rate is less but when the same raw materials are imported by commercial importers to supply to the industries then more tax is being levied on them which is utter injustice.
“The manufacturers would take advantage of the lower duty and sell the imported industrial raw materials in the markets, which would result in severe financial losses to the commercial importers who import the raw materials by paying more duty”, he claimed.