Flour mills end protest against tax hike

PFMA announces resumption of flour supply to retailers


Our Correspondent June 25, 2021

LAHORE:

The Pakistan Flour Mills Association (PFMA) has formally announced it is ending its protest over proposed hike in taxes on flour milling after the government on Wednesday issued a clarification.

“As the federal government has accepted our demands, we have decided to end our protest,” PFMA Chairman Asim Raza said on Friday while addressing a press conference in Punjab’s provincial capital.

“Flour mills have restarted supply of wheat flour to retail stores,” he added.

The PFMA on Tuesday announced that all flour mills of the country would stop the supply of the commodity from Wednesday and close operation from June 30 in protest against proposed increase in three taxes related to the flour milling industry.

Also read: After protest, govt withdraws flour taxes

In the Finance Bill 2020-21, the federal government had proposed to abolish one per cent rebate on annual sales of flour mills while also increasing the sales tax on bran by 10% and the sales tax on import of machinery used for making flour by 7%.

The increase in turnover tax was expected to increase the price of a 20kg bag by Rs30 while the increase in sales tax on bran was expected to increase the price of each 20kg bag of flour by Rs67. The implementation of the taxes was likely to increase the price of a 20kg bag of flour by Rs97.

According to the PFMA office-bearers, the mills were to completely stop supplying wheat to open markets and even Sunday and Sahulat bazars if the government did not withdraw the proposed taxes.

However, in a major development, the federal government on Wednesday decided to withdraw the proposed 17% sales tax on wheat bran while undoing the decision to abolish one per cent rebate.

The Federal Board of Revenue (FBR) on Wednesday night issued a “clarification” with regard to the table prescribing tax rates for minimum tax on turnover basis.

It said the table had been substituted in the Finance Bill-2021 to provide relief to retailers of fast moving consumer goods (FMCG) including flour mills and refineries.

“The words ‘flour mills’ could not be mentioned inadvertently in the table which was an error and had been noted and would be rectified in the amended bill.

“This would mean that the minimum tax applicable on flour mills would remain at 0.25% of the turnover instead of 1.25% as being generally interpreted,” it said.

The FBR further clarified that in order to boost the present government’s drive to keep inflation under control and to give maximum relief to the business community, the general sales tax (GST) on wheat bran proposed to be enhanced to 17% in the Finance Bill is also being taken back.

Addressing the media, Asim Raza thanked Prime Minister Imran Khan and Minister for Finance Shaukat Tarin as well as the FBR chairman and the federal secretary food. He suggested that the government should hold consultation with the PFMA during the budget making process in future.

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