Category: Trade & Industry

This section covers news on trade and industry. Pakistan Revenue is committed to providing the latest updates on business trends.

KATI flays imposition of new taxes

KARACHI: Korangi Association of Trade and Industry (KATI) expressed displeasure over promulgation of Presidential Ordinance to imposed new taxes.

KATI President Salman Aslam in a statement issued on Thursday expressed reservations over the imposition of new taxes worth Rs38 billion through a Presidential Ordinance.

Besides, he said instead of keeping the interest rate at 15 per cent, it should have been reduced considering the current situation, which would have stabilized the economy.

Salman Aslam, while reacting to the announcement of a further increase in income and sales tax on electricity bills and super tax said that the government has issued this ordinance to get additional revenue of Rs80 billion from the International Monetary Fund (IMF).

Due to this, the difficulties of the industry will increase enormously and it will be impossible to continue the industrial production process because the cost of production and electricity prices are already at the highest level in history and a further increase in them will bring the industries to the brink of collapse.

KATI chief said that along with the announcement of the agricultural policy, the Prime Minister should also announce the industrial and economic policy on the long-standing demand of the business community and industrialists so that investment in the country is promoted and the economy moves towards improvement.

Aslam said that the government is lifting the ban on imports of luxury and non-essential goods following the demand of the IMF, which will lead to the import of luxury goods despite the additional duty and outflow of valuable foreign exchange. He said that the ban on imports should have been maintained by the government.

Salman Aslam welcomed the government’s reduction in duty and import of raw materials, machinery, and other essential items.

He said that instead of imposing more taxes to collect additional revenue, the government should consult with the industrialists, and if taxes are reduced including the cost of production, tariffs of electricity and gas reduced, then the business will be faster in the country, the industrial wheel will start moving, which will help the government. The required tax target will also be achieved.

KATI President demanded the government not to increase super tax and tax on electricity bills, otherwise, industries in the country will be closed, unemployment will spread rapidly and the economic crisis will intensify due to lack of investment.

August 25, 2022
Karachi Chamber stresses need to rationalize power tariff

The leadership of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday underscored the exorbitantly high electricity tariffs need to be rationalized as the suggested increased electricity tariffs would prove disastrous for trade, industry, SMEs and the public.

Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees, while highly appreciating the Prime Minister for taking notice of public and business community’s complaints/ protests on inflated electricity bills.

In a joint statement, Chairman BMG and President KCCI said that the business community was grateful to Prime Minister Shehbaz Sharif for taking cognizance of the electricity tariff but while we appreciate, we would like to apprise that the abnormal increase would actually prove to be a disaster for the industries, especially Small & Medium Size Enterprises (SMEs) who are purely dependent on electricity and no alternate source including gas was available to these energy-starved SMEs.

READ MORE: Political parties responsible for Pakistan economic crisis: KCCI

This country badly needs SMEs who must be promoted at any cost as it is a well-known fact that SMEs are the backbone of any country’s economy so supporting SMEs should be the highest priority of the government, they added.

They further opined that trade cannot absorb this kind of an exorbitant increase in electricity tariff and the commercial users will suffer badly hence it has to be rationalized. The increase had been suggested when the dollar rate jumped from Rs180 to more than Rs240 which was abnormal and due to foul play of exchange players but now as it has come down and was likely to descend further, therefore the increase in electricity tariff was not making any sense at all.

They mentioned that the Karachi Chamber along with Industrial Associations and all Chambers of Commerce of Pakistan were of similar opinion that exorbitant increase in electricity tariffs cannot be absorbed hence, we urge the Prime Minister that this needs a rational exercise and carefully looked into because it can prove to be fatal for many industries and would lead to enhancing unemployment across Pakistan while the exports will also suffer badly from this behest.”

READ MORE: Karachi Chamber demands declaring rain emergency

They also pointed out that although ECC approved electricity rate at US$9 cent per kWh to export-oriented sectors from August 1, 2022 but this decision was withdrawn which was an imprudent move as the cost of doing business in Pakistan was already too high as compared to regional competitors.

The government must keep in mind that during the last two months, the exports have been constantly decreasing hence, electricity rate at US$9 cents per kWh to export-oriented sectors must continue otherwise the country’s exports would keep on descending and create more problems for the economy particularly the rising unemployment.

While stressing the need to continuously support the exports, Zubair Motiwala and Muhammad Idrees requested that before issuance of any kind of notification, Prime Minister should look into this matter on an urgent basis so that the uncertainty which has been now triggered due to the electricity tariff hike announcement could come to an end.

They also appealed the Prime Minister to look into NEPRA matters as many decisions taken by NEPRA were purely against the consumers and in recent history, the regulator has never favored the consumers. Why is it that all the decisions taken by NEPRA favor DISCOs and KE only.

READ MORE: KCCI demands release of stuck up containers

This also needs to be seen and the recent decisions of charging FCA and bringing back the fixed charges, which were abolished long time ago but have been arbitrarily reintroduced, must also be deferred.

As consumers’ point of view was never being taken seriously at the so-called public hearing, Chairman BMG and President KCCI demanded that NEPRA rules must be redefined and out of NEPRA’s penal of three judges at the Public Hearings, one should be a representative of consumers through Chamber’s recommendation.

In the end, they reiterated that all actions taken by NEPRA should be remanded back and those in pipeline should also be stopped forthwith.

READ MORE: KCCI demands implementation of Riba free banking

August 23, 2022
KATI rejects further petroleum price hike in Pakistan

KARACHI: Korangi Association of Trade and Industry (KATI) on Thursday strongly rejected any further increase in prices of petroleum products in Pakistan.

KATI President Salman Aslam in a statement expressed concern over Federal Minister of Finance Miftah Ismail’s indication of a further increase in the prices of petroleum products.

READ MORE: Businessmen express shock over petroleum price hike in Pakistan

He said that the federal minister has asked to increase the petrol levy by Rs10 from September 1, 2022 up to Rs50 per litre, which will be very harmful to the economy.

The prices of petrol in the global markets have reached the lowest level in 5 years, while the cost of the dollar has also decreased by more than Rs30 in the past few days. In this case, the increase in the prices of petroleum products by justifying the IMF agreement is not acceptable.

READ MORE: SBP assures allowing stuck up containers of banned import

Salman Aslam said that his party leadership is also unhappy with the Finance Minister’s decision, while the government’s allies are also not supporting this initiative as it will increase inflation instead of being controlled.

He said that the finance minister has expressed his commitment to reducing inflation, but that it is not possible unless petroleum products and utility prices are reduced. It is impossible to control inflation or inflation due to the cost of production.

READ MORE: Sindh reduces sales tax on services for IT sector: SRB

President KATI said that the government does not consult or trust the business community before setting terms with the IMF, due to which government decisions affect the country’s economy.

Salman Aslam said that the government had already increased the price of electricity in the last few days, after which there was no justification for increasing the prices of petroleum products.

He appealed to the government to immediately withdraw the increase in the prices of petroleum products and keep the petroleum levy at a minimum level.

He said that the finance minister’s statement creates a chaotic situation among investors and stakeholders, directly affecting the country’s stock market and investments.

READ MORE: FPCCI demands SBP to check speculative dollar trading

August 18, 2022
AVALON – The Most Tech-Enable Real Estate Project In Islamabad

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August 17, 2022
Businessmen express shock over petroleum price hike in Pakistan

KARACHI: Businessmen have expresses shock over hike in petroleum prices in Pakistan despite massive reduction in oil prices in international market.

The businessmen are in shock and expressed their serious concern over the hike in petroleum products in Pakistan despite the fact that crude oil prices have plunged to below $90 a barrel while the rupee has jumped by around Rs30 versus dollar during the last fortnight, said a statement issued on Wednesday.

READ MORE: Miftah defends petrol price hike in Pakistan from August 16, 2022

The chairman of Businessmen Panel (BMP) and former president of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Mian Anjum Nisar reiterated his demand of passing on relief of cut in oil prices in the global market to the industry, besides bringing key policy rate to a regionally competitive level.

On Monday night, the federal government announced a hike of Rs6.72 per litre in the price of petrol for the remaining days of August 2022, according to a notification issued by the Ministry of Finance.

He voiced his concern over the increase in fuel prices despite downward trend in international market. The present government came into power to give relief to the masses, which should be its top priority, as the hike in petroleum prices will trigger inflation in the country.

READ MORE: New petroleum prices in Pakistan from August 16, 2022

He said that it was beyond comprehension that why prices were raised despite a reduction in oil prices at the international level, adding that the government should have mercy on poor masses and give them some relief.

Mian Anjum said when Russia invaded Ukraine last spring, energy experts were predicting that oil prices could reach $200 a barrel, a price that would send the costs of shipping and transportation into the stratosphere and bring the global economy to its knees.

Now oil prices are lower than they were when the war began, having dropped more than 30 percent in barely two months. The news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark.

Gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide, and prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things so that cost of production could come down to a regionally competitive level.

READ MORE: New petroleum prices in Pakistan from August 1, 2022

Moreover, a large number of fuel stations remained closed nationwide despite no strike or shortage of petroleum products in the country. He said that oil marketing companies (OMCs) and petroleum dealers have allegedly created an artificial fuel crisis as the coalition government increased petrol prices by Rs6.72 per litre.

Recent practices suggest they usually stop supplies of petrol and diesel to end-consumers for a couple of hours to make additional profit. However, this time around the suspension lasted for almost an entire day. Many petrol pumps had gone dry by Monday evening and new supplies came on Tuesday afternoon.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president demanded the government to reduce petroleum prices without any delay.

He demanded that the government should slash the prices of the petroleum products immediately as the international oil prices have substantively come down; and, the benefit needs to be shifted to the masses.

He noted with a sigh of relief that oil prices are now under $90 per barrel. The move will bring down the inflation in a much more effective and tangible manner than raising the interest rate to a 14-year high of 15 percent, he added.

Mian Anjum emphasized that the full force of the multiplier effect of the raise of the petroleum products has not yet materialized in Pakistan and inflation will keep rising in coming weeks if the relief from international market is not shifted to the end consumer.

READ MORE: New petroleum prices in Pakistan from July 15, 2022

FPCCI former chief explained that global macroeconomic sentiments are not optimistic and growth forecasts have been significantly lowered to the tune of being recessionary; and, the phenomenon may drive the international oil prices even lower than $90 per barrel in coming weeks. However, he maintained, we have to tread a cautious path and gradually but progressively lower the domestic petroleum prices.

The BMP Chairman called for the prudent and diligent regulation of the markets to allow the country to benefit from the downward trends in international oil prices, edible oils and initial signs of receding supply constraints in some other commodities.

He said that our industry already facing cut-throat competition in both national and international markets, as the industry was directly hit by the fluctuation of oil prices, which also directly increase inflation, he said. Its negative impact can be witnessed in the hike of cargo freight charges, which adds cost to the industrial production at all stages, he said.

August 17, 2022
SBP assures allowing stuck up containers of banned import

KARACHI: The State Bank of Pakistan (SBP) has assured the business community of allowing to release all the containers with consignments of banned imported goods.

In a statement issued on Monday, President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees said that the State Bank of Pakistan (SBP) has agreed to release all the containers which arrived at the Ports until July 5, 2022 but remained stuck up awaiting approval from SBP.

READ MORE: Pakistan decides to lift ban on imported goods

While referring to a message received from Deputy Governor SBP Dr. Inayat Hussain, President KCCI said that Deputy Governor SBP has assured that all the cases wherein the Bill of Lading is prior to issuance of SBP’s instructions on July 5, 2022 which have been submitted by KCCI will be released within the next 2 to 3 days whereas any other pending request for release of similar stuck-up consignment may also be referred to SBP for timely release.

READ MORE: 15% surcharge imposed for clearance of banned items

Muhammad Idrees said that thanks to the untiring efforts made the leadership of Karachi Chamber, particularly Chairman Businessmen Group Zubair Motiwala who constantly remained in touch with Finance Minister Miftah Ismail and kept convincing him to resolve this matter, relief has finally been provided to perturbed importers which the business community warmly welcomes.

READ MORE: Pakistan allows release of banned items stuck up at ports

He thanked Finance Minister Miftah Ismail for taking keen interest in all the issues being raised by KCCI and issuing prompt directives for resolving the same on top priority which has help in restoring the confidence of the entire business and industrial community.

“This particular step to release stuck up containers along with some other pro-business measures and the government seriousness towards resolving the pressing issues suffered by the economy would ensure that the wheels of the industry keep on spinning without any interruption,” he added.

READ MORE: KCCI demands release of stuck up containers

August 15, 2022
Sindh reduces sales tax on services for IT sector: SRB

KARACHI: Dr. Wasif Ali Memon, Chairman, Sindh Revenue Board (SRB) has said that as the Sindh Government has drastically reduced Sindh Sales Tax on IT, Software Businesses and Call Centers from 13 percent to just 3 percent, all relevant businesses which moved to other provinces, should come back to Karachi where they will enjoy the lowest sales tax as compared to other provinces.

“IT related businessmen from Karachi Chamber whose peer businessmen moved to Lahore or any other city, must advise them to get back to Karachi where they will be charged a mere 3 percent ST without input tax whereas large establishments which prefer standard rate with input tax credit, have the option of to opt 13 percent with input tax credit facilities”, he added while exchanging views at a meeting during his visit to the Karachi Chamber of Commerce & Industry (KCCI).

READ MORE: Miftah assures shopkeepers of removing multiple taxes on electricity bill

The meeting was also attended by Chairman Businessmen Group Zubair Motiwala (Via Zoom), Vice Chairman BMG Jawed Bilwani, General Secretary BMG AQ Khalil, President KCCI Muhammad Idrees, Senior Vice President Abdul Rehman Naqi, Vice President Qazi Zahid Hussain, Former President Younus Bashir, Advisor SRB Mushtaq Kazmi and KCCI Managing Committee Members along with senior SRB officials.

Dr. Wasif stated that SRB performed exceptionally well during the last fiscal year wherein record-breaking Rs153 billion tax was collected therefore, the government has given an ambitious tax collection target of Rs180 billion for current fiscal year which can only be achieved through the support and cooperation of Karachi’s business community which was highly tax-compliant. “Despite the outbreak of COVID pandemic and extraordinary spells of rainfalls which terribly affected many businesses, the business community of Karachi has been regularly and sincerely paying taxes to SRB which we greatly acknowledge”, he added.

READ MORE: FTO investigates tax collection through electricity bills

He said that although Karachi contributes highest taxes to SRB but the activities of SRB were not confined to this city only as SRB’s Regional Offices have also been opened in Hyderabad, Benazirabad, Larkana, Sukkur and Mirpurkhas while an SRB Office in Ghotki will also be inaugurated soon.

In response to President KCCI’s suggestion, Chairman SRB agreed to form a joint SRB-KCCI Committee along with provision of direct helpline to KCCI members so that all their taxation issues could be promptly resolved.

Chairman BMG, in his remarks, pointed out that although Karachi contributes 94 percent taxes to SRB but it was really unfortunate that this city was not receiving sufficient development funds according to its matchless contribution which has resulted in miserably bringing down the standards of living and doing business in Karachi. “What we contribute to provincial kitty is always being highlighted and appreciated but what we get in return never comes into limelight which is very disturbing. Neither from federal government nor from provincial government, Karachi receives its due share”, he noted, adding that the injustices with this city must and brought to an end now.

READ MORE: Withdrawal of sales tax through electricity bills demanded

He stressed that keeping in view Karachi’s contribution of more than 70 percent to national exchequer and 95 percent to provincial kitty, it was high time that Karachi must receive what it deserves. Due to lack to development funds, Karachi’s infrastructure was in awful state and the same has been witnessed by the entire world during the current Monsoon season. “SRB should also have access to information about the expenditure of revenue so that we could compare revenue generation with expenditure”, he added.

Earlier, President KCCI Muhammad Idrees, while welcoming Chairman SRB, appreciated SRB’s all-time seriousness towards resolving issues being highlighted by KCCI which were promptly being responded and amicably resolved by SRB officials. “However, there are several pending taxation issues related to indenting businesses, travel agents and other businesses along with anomalies in SRB laws which also need to be extensively discussed and resolved in light of ground realities.”

To efficiently deal with all the SRB related taxation issues and revision in relevant laws, it was very crucial to form a joint committee between KCCI and SRB so these could be discussed and resolved in such a manner that the measures agreed upon result in bringing down the tax rates which would not bring down but in fact increase the provincial revenue as large number of taxpayers will certainly prefer to get registered in Sindh.

READ MORE: Tax through electricity connections on retailers, service providers

He said that thanks to KCCI’s rigorous efforts, the federal government has finally realized and agreed to treat the income of indenters as exports proceeds hence, the same must also be announced by SRB which would help minimizing the hardships being faced by indenters who were being charged heavy taxes on marginal commissions.

He appreciated the Sindh Government for paying attention to KCCI’s demand to reduce Sindh ST on IT, Software Businesses and Call Centers which would encourage a large segment of businesses to register the businesses in Sindh.

August 12, 2022
FPCCI demands SBP to check speculative dollar trading

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday demanded the State Bank of Pakistan (SBP) to check speculative dollar trading.

FPCCI President Irfan Iqbal Sheikh at a meeting with high level delegation of the SBP visited the Federation House, urged the central bank to use policy tool to check the speculative dollar trading over the past few weeks.

READ MORE: FPCCI warns factories closure as rupee crashes against dollar

The senior management of the SBP led by Governor (A) Dr. Murtaza Syed and comprising, among others, Deputy Governors Dr. Inayat Hussain and Ms. Sima Kamil visited the FPCCI to discuss current economic challenges and the measures being taken by the Government and SBP.

President FPCCI Mr. Irfan Iqbal Sheikh in his inaugural remarks welcomed Dr. Syed and the senior management of the central bank for their visit to the FPCCI.

Shedding light on current business scenario from FPCCI perspective, he requested the Governor (A) to use policy tools available at the central bank’s disposal to check the speculative dollar trading over the past few weeks.

He observed that importers, manufacturers and industries were at the receiving end due to speculative nature & unavailability of dollars, shortage of industrial raw materials and the resultant disruptions in the production processes.

READ MORE: Foreign investors discuss economic situation with SBP

Irfan maintained that over the past several weeks the commercial banks have been offering LCs to importers at the rates higher than inter-bank rates and requested the SBP to play its role for course correction.

Dr. Murtaza Syed, Governor (A) State Bank of Pakistan (SBP) has announced the formation of a committee and appointment of an SBP liaison officer for close coordination with the FPCCI and timely redressal of grievances of business committee. He made this announcement during his visit to the FPCCI on the invitation of their management.

The Governor (A) appreciated business community for their endurance in facing the challenges posed by both international and domestic events and ensured that SBP will provide them its full support by addressing their concerns as much as possible.

The Governor (A) in his address apprised the audience that staff-level IMF agreement is already in place and the board-level approval is expected in the third week of August as their board will meet after their vacations in the first-half of August are over.

READ MORE: SBP introduces foreign currency, rupee value business accounts

He added that SBP believes that rupee is undervalued at the moment and dollar has overshot in the forex market due to several reasons; however, he hoped that it will come down to its real value in 2 – 3 months. He invited the business community to sit together with the SBP for a constructive consultative process and give suggestions on prevailing economic situation, foreign exchange and other related issues.

Dr. Syed also assured the participants to look into technical requirement of prior approvals required by the commercial banks from SBP on the clearance of financial documents of the consignments with the H.S. Codes starting with 84 & 85 as these restrictions were affecting the import of tractor parts and other agricultural machinery as well.

A senior SBP official highlighted the support extended to the businesses in general and to the exporters in particular. SBP enhanced short term Export Refinance limits from Rs432 billion to Rs857 billion in just last four years reflecting an increase of almost 100 per cent. Likewise, outstanding stock of SBP’s long term fixed rate financing for the exporters (LTFF) has also witnessed an increase from Rs209 billion to Rs329 billion in last three years reflecting 57 per cent growth.

The Federation acknowledged that Temporary Economic Refinance Facility (TERF) massively helped in stimulating investment and boosting economy in the backdrop of COVID-19. It will not be out of context to mention that most of the business entities availed TERF at rates far below than the maximum cap of 5 per cent.

READ MORE: OICCI suggests duty cut on locally manufactured cars

The overwhelming success of TERF indicated that it was successful in filling the gap for long term investment in the country. An amount of Rs436 billion had been approved under this facility for 628 businesses.

The FPCCI members raised certain questions which were comprehensively answered by the senior SBP management during the meeting and ensured the FPCCI members that the senior management of the central bank was always available to listen to their issues and resolve them on priority. On a question regarding expiry of SBP’s Refinance Facility for Renewable Energy, the Federation was informed that the scheme has been extended till June 2024.

In the end, the President FPCCI submitted some suggestions for consideration of the SBP. The Governor (A) assured to look into the merits of these suggestions and take a decision soon.

August 3, 2022
Foreign investors discuss economic situation with SBP

KARACHI: Foreign investors operating in the country have discussed ongoing economic situation with the State Bank of Pakistan, a statement said on Tuesday.

The members of Overseas Investment Chamber of Commerce and Industry (OICCI), the body representing foreign investors and multinational companies in Pakistan, met with Dr. Murtaza Syed, Acting Governor, State Bank of Pakistan (SBP), Dr. Inayat Hussain, Deputy Governor, SBP and Sima Kamil, Deputy Governor, SBP for a discussion on urgent fiscal and monetary policy measures that need to be taken to help stabilize Pakistan’s economy.

READ MORE: SBP introduces foreign currency, rupee value business accounts

Ghias Khan, President OICCI and Abdul Aleem, Secretary General, OICCI led the discussions and raised member concerns related to the pre-approval procedure of LCs for import of machinery and spare parts, timely remittance payments, approval exemptions of shipping values being too low, and other operational issues. It was stressed upon the SBP leadership to set timelines so that industry supply chain is not compromised.

The SBP team gave a comprehensive overview of the current economic situation and the planned strategy to tackle issues in 2023. Pakistan is primarily a consumer-driven economy with consumption driving up to 95 per cent of the GDP. The SBP team was confident that Pakistan’s problems were temporary and urged the OICCI members to work on improving exports to help balance the exchange rate fluctuations and currency depreciation.

READ MORE: Rupee makes recovery against dollar for 3rd straight day

Ghias Khan stated: “This meeting was a much needed first step towards the recovery of Pakistan’s economy. It is imperative that we implement cogent measures to halt our pattern of circular debt. The SBP has always played a critical role in stabilizing Pakistan’s economy, and I am confident that under Dr. Murtaza Syed’s leadership we will be able to withstand the current economic climate while charting a path for growth.”

READ MORE: OICCI suggests duty cut on locally manufactured cars

Dr. Murtaza Syed commented, “SBP is taking tough measures and making difficult decisions to help avert the economic crisis. Global inflationary pressures coupled with a procyclical expansionary fiscal policy during a pro-cyclical period is one of the main reasons Pakistan is at this crossroads today. Once these measures are implemented and the IMF loan is received, the pressures on the economy will ease, specifically with regards to the depreciating Rupee.”

OICCI serves as a platform to promote foreign investments and plays a major role in the growth of commerce and industry in the country. Collectively, OICCI invested USD 2.4 billion last year, contributing one-third of the country’s total tax collections.

READ MORE: Return filing be made mandatory for account holders

August 3, 2022
Miftah assures shopkeepers of removing multiple taxes on electricity bill

KARACHI: Finance Minister Miftah Ismail on Tuesday assured shopkeepers and small retailers of removing all taxes being collected through electricity bills once the fixed tax regime is implemented.

Responding to demand raised by retailers and shopkeepers, the finance minister promised to remove all the other taxes from the electricity bills once the fixed tax regime is activated to avoid double taxation, as quoted by a press release issued by Karachi Chamber of Commerce and Industry (KCCI).

“Only GST on electricity consumption will be applicable and at the year end, they will be required to submit a document to intimate the tax authorities about the payment of taxes during the year,” Miftah Ismail was quoted as saying.

READ MORE: FTO investigates tax collection through electricity bills

Earlier, the KCCI office bearers highlighted that the government is already charging hefty multiple taxes on electricity bills on commercial units including Electricity Duty, General Sales Tax (GST), Extra GST, Further GST and Income Tax U/S 235 of the Income Tax Ordinance, 2001.

In response to the protests by small retailers against the fixed retailers’ tax introduced in Finance Act 2022, Finance Minister Miftah Ismail announced to reduce the fixed tax rate from Rs. 6000 per month on non-filers to Rs. 3000 on electricity bills and exempted consumers whose electricity bills was up to 150 units.

To voice the concerns of the small retailers, Chairman BMG Zubair Motiwala and President KCCI Muhammad Idrees called a meeting of business associations and held talks with Finance Minister Miftah Ismail and Chairman FBR on Zoom.

READ MORE: Withdrawal of sales tax through electricity bills demanded

During the session, they expressed concerns over the high rate of taxes being charged through electricity bills. They argued that commercial consumers are already paying multiple taxes in their monthly electricity bills including fuel adjustment surcharge, electricity duty, income tax, general sales tax, extra GST, further GST besides electricity charges, and over and above a new fixed tax has been levied on all commercial consumers which is unsustainable.

In the meeting held at Karachi Chamber of Commerce and Industry between the Finance team and small traders, the Finance Minister Miftah Ismail promised to waive multiple taxes on electricity bills and also agreed to consider the demands of small traders to increase the threshold.

After taking the leadership of small shopkeepers on board, Chairman Businessmen Group Zubair Motiwala and President KCCI Muhammad Idrees urged the government to accept the genuine demands of small businessmen who are already struggling to make both ends meet and increase the suggested threshold of 150 units of electricity consumption from fixed tax regime and remove other taxes from electricity bills.

READ MORE: Tax through electricity connections on retailers, service providers

General Secretary BMG & Former President KCCI AQ Khalil stressed on removing other taxes and consider all NTN holders as filers under the fixed tax regime.

In the Finance Act FY22, the government imposed a fixed tax regime for retailers whereby even the unregistered consumers with zero or minimal units were getting Rs. 6000 monthly tax on electricity bills. After severe hue and cry from small traders against the new fixed tax regime for retailers, the Finance Minister Miftah Ismail announced a revision in the scheme under which up to 150 units of electricity consumption were exempted from the tax and removed the condition to charge double amount of tax from unregistered traders, making it full and final tax and also granted immunity from tax notices, audits and raids by FBR officers.

To address the concerns, KCCI held an urgent meeting with a delegation of small businessmen receiving fixed tax on electricity bills headed by Abdul Majeed Memon Chairman, Special Committee for Small Trader of KCCI and Talat Mehmood Co Chairman Special Committee for Small Traders accompanied by representatives of several market associations of Karachi.

READ MORE: FBR explains income tax on export of services

KCCI had invited all the associations of Karachi and vast majority of them participated in this meeting where they unanimously agreed to the decision of Chairman BMG Zubair Motiwala that the tax may be implemented on the basis of units of consumed where up to 250 units will be exempted from tax and those consuming above 250 units of electricity may be charged fixed tax accordingly. It was also unanimously agreed that all the other taxes including Income Tax, GST Extra GST and Further GST will be replaced with this single fixed tax as full and final tax liability.

READ MORE: FBR restores 100% depreciation deduction

The delegation comprised of Muhammad Akram Rana Vice Chairman All Karachi Tajir Ittehad, Asif Gulfam Chairman Alliance of Arambagh Market, Dilshad Bukhari Saddar Jama Mall, Mehboob Azam President All Pakistan Small and Cottage Industry, Mehmood Hamid General Secretary All Pakistan Small Traders and Cottage Industry, Muhammad Feroz President Saddar Cooperative Market, Muhammad Fayyaz Chairman Sind Tajir Ittehad Old City Area, Rafiq Jadoon President All Pakistan Anjumane Tajiran (Bolton Market), Ilyas Memon President Tariq Road Trader Alliance, Nadeem Ahmed Khan President All Karachi Plastic Bags Manufacturing Association, Zulfiqar Shiwani Regional President Sindh Tajir Ittehad, Jamil Parachi Chairman Sindh Tajir Ittehad, Mirza Sadiq Baig Vice President Sindh Tajir Ittehad, Sheikh Muhammad Irshad Jama Alliance, Chaudry Aamir Ali Khan President Car Association, Abdur Raheem Car Dealers Association, Abdul Qadir Noorani General Secretary Joria Bazar Market, Javed Shams Daniyal President Anjuman Tajiran e Sindh – Karachi Division, Abdul Samad Khan SVP Saddar Alliance of Market Association, Abdullah Batra Chairman Orangi Traders Association, Arif Patel Goldsmith among others. The members of the Managing Committee of KCCI also attended the meeting.

August 2, 2022