ISLAMABAD: Federal Board of Revenue (FBR) has been urged to review minimum tax regime under Section 113 of Income Tax Ordinance, 2001 of oil refineries and oil marketing companies (OMCs).
The Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2022/2023 recommended the FBR that the rate of minimum tax under section 113 of Income Tax Ordinance, 2001 should be reduced by 0.25 per cent each year from current rate of 0.75 per cent. Further, this rate should be applicable on gross profits instead of turnover.
The OICC further recommended that zero rating sales tax on Exports -Section 4(b) of Sales Tax Act, 1990: Clarity is required with respect to the definition of stores and provisions. Amendment suggested is as follows: “Supplies of stores and provisions including fuel for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969)”.
The OICCI highlighted issuance of Debit/ Credit Note and pointed out Section 7 read with Section 9 of Sales tax Act, 1990 states: “Where a registered person did not deduct input tax within the relevant periods, he may claim such tax in the return for any of the six-succeeding period.”
In the E&P Sector, provisional invoicing mechanism is adopted till the issuance of notification of Gas prices & execution of Oil & Gas Sales Purchase agreements. Normally this process takes more than a year and requires issuance of debit/ credit note on finalization. This results in complication when tax authorities are requested to allow condonation from six months period, and they take years to grant the said approvals.
“Legislation be introduced in Sales tax Act specifically for E&P Sector allowing issue of Debit/ Credit notes after finalization of agreements with GOP. Also, issues of claiming input in six succeeding periods may be relaxed to six months from the date of notification by OGRA,” it recommended.
Regarding, disallowance of input tax on sales to unregistered customer-Sub section (4) of section 73 of the Sales Tax Act, 1990, it recommended to exclude OMC’s and Electric Power and Gas Distribution Companies from the ambit of Sub section (4) of section 73 of the Sales Tax Act, 1990 as per power of FBR to exclude persons or class of persons.