Govt asked to reverse change input tax rule

Amendment will increase production cost, make products uncompetitive

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has urged the government to withdraw the amendment to Finance Act 2016 that changed the definition of input tax and excluded the sales tax paid under provincial laws.

LCCI President Sheikh Muhammad Arshad said the amendment would lead to dual taxation as indirect taxes paid to the provinces would not reduce the incidence of sales tax paid to the central government.

Moreover, he said, input tax adjustment would not be available if the supplier did not declare such supply in his return or did not pay the tax due as per his return.

Consequently, input tax will become inadmissible for the buyer only for the reason that the supplier of goods has not declared such supply in his return of sales tax or has not paid the tax due.

He asked the government to withdraw the amendment as the buyer would not have control over the conduct of supplier. “This adjustment will increase the cost of production and also make our products uncompetitive internationally,” he said.

LCCI Senior Vice President Almas Hyder said a 2% additional tax under Section 3(1A) was being charged from commercial importers on sales made to unregistered persons.

He pointed out that the extra tax was also being borne by the importers as it was very difficult to recover it from unregistered customers due to cut-throat competition and smuggling.

“It is the responsibility of the government to register businesses whereas the already registered ones are constantly penalised for being in the tax net,” he said.

Published in The Express Tribune, July 15^th, 2016.

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