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Battery makers seek concessions in import regime

Business

May 19, 2019

LAHORE: Battery manufacturers have sought concessions in import regime, and proposed that full sales tax should be deducted from non-registered buyers to eliminate malpractices in the industry.

In their budget proposals for the 2019/20, the battery manufacturers said purchase of taxable goods from unregistered persons is liable to deduction of sales tax at the rate of one percent. This encourages some of the companies in battery industry, who are involved in unfair practices, to declare huge amount of purchase from unregistered persons and get away by just paying one percent of the value of purchases.

They suggested a registered person on the purchase of taxable goods from persons liable to be registered, but not actually registered, would deduct sales tax at the rate applicable to the taxable goods supplied to him, from the payment due to the supplier and deposit the same to the government treasury. The deduction of full amount of applicable tax will discourage undocumented sales and purchases, they said.

It is proposed that uniform rate of sales tax at five percent should be applied at each stage of lead buying, ie sale of lead scrap (raw lead of battery and factory scrap), sale of reclaimed lead (semi-processed), and refined lead / antimonial lead (fully processed). Further, 100 percent withholding sales tax should be levied on the buyers.

The rationale behind this proposal is that presently reclaimed lead is subject to five percent sales tax, whereas lead scrap and refined lead / antimonial lead are subject to 17 percent sales tax.

Uniform rate of five percent will ensure transparency in business, as well as reduce the margin for bogus claim of input tax by lead suppliers, they suggested.

The battery manufacturers also proposed to exempt imports made under SRO 655(I) /2006 dated June 22, 2006 from the levy of two percent additional Customs duty under SRO 630(I)/2008.

Additional duty on input items such as raw materials, components, sub-components of the automotive industry and automotive batteries, that are not manufactured locally, have adversely impacted the highly cost sensitive sector, they added.

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