Traders incensed by new fodder, produce taxes

Withholding tax on licences increased 900% in all categories

LAHORE: Withholding tax on the renewal of licences for dealers and commission agents at fodder and produce markets has been increased ten-fold.

A Federal Board of Revenue notification has directed the secretaries of all market committees to collect the taxes according to the new rates.

The massive rise has led commission agents to stop applying for licence renewals while also planning a countrywide meeting in Lahore to mull over a potential strike. Punjab Agriculture Minister Nauman Langrial said the government will negotiate with representatives of commission agents to address their grievances, while details will also be sought from the FBR.

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Under section J/236 of the Income Tax Ordinance, the FBR receives withholding tax from dealers and commission agents trading at fodder, fruit and vegetable markets across the country. For this purpose, the market committee has been given the responsibility of collecting the tax while issuing new licences or at the time of annual renewal of existing ones.

Withholding tax rates have been increased by 900% for the current fiscal year budget. It has been stated in a letter issued by the FBR on Saturday to the secretaries of all market committees that the federal government has made a change in the withholding tax rate of commission agents and dealers in the budget for the fiscal year 2019-20. Therefore, market committee officials must impose new taxes while issuing new licences or renewing old ones.

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According to the FBR letter, withholding tax imposed on category "A" licences has been increased from Rs10,000 per annum to Rs100,000).

Category "A" licenses are issued to industries including sugar mills, edible oil mills, flour mills, cotton mills, poultry feed mills, and rice mills. The withholding tax imposed on category "B" licences has increased from Rs7,500 to Rs75,000. Category "B" licences are issued to commission agents at vegetable, fruit and fodder markets and dealers of agricultural commodities including cooking oil and flour in the notified area of the market committee.

The withholding tax imposed on "C" and "D" category licences have increased from Rs5,000 to Rs50,000 per annum. These two licenses are issued to retailers. Although the Punjab government terminated "C" and "D" licenses in 2006, they still exist in other provinces.

Speaking to The Express Tribune, Badami Bagh Fruit Market President Haji Ramzan said that the traders have rejected the increase in withholding tax rates as it will make business extremely difficult.

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“If the government increased it by a reasonable rate, we would accept it,” he claimed. The implementation of this tax has created concerns in the markets across the country and we have called an emergency meeting, he added. “The final decision will be taken after considering all options, including strikes,” he reiterated while saying that initially, protest banners are being raised in all the markets.

Punjab Agriculture Minister Langrial told The Express Tribune that they are negotiating with traders and their position will be shared to the federal government. The Punjab Government has already terminated the "C" and "D" licenses of for market committees so that small level traders could get some relief. “Now it is just the matter of "A" and "B" category licences, which we are hoping to resolve peacefully.

Published in The Express Tribune, July 24^th, 2019.