Daily Times

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has urged the Federal Board of Revenue (FBR) to review SRO 1125(I)/2011, as it has pushed the registered suppliers of packaging material to the wall because manufacturers have now started to make their purchases from unregistered suppliers or from other countries.

According to a statement issued on Wednesday, LCCI President Sheikh Muhammad Arshad and Vice President Nasir Saeed stated that this would have far reaching consequences for the packaging industry in the country.

The LCCI office-bearers said that most of the packaging industries were supplying packing material to the exporters and were duly registered for sales tax.

The denial of input tax and refund to exporters would encourage them to make purchases from unregistered persons so that only one percent tax is required to be withheld, instead of making purchases from the said registered manufacturers and suppliers who would charge 17 percent sales tax, they said.

The business of the registered manufacturers and suppliers of packaging material would come to a standstill and they would be forced either to close down or to de-register themselves, they added.

The LCCI leaders further said that the problem would only be aggravated in view of the fact that most of the large exporters and export houses would obtain Duty and Taxes Remission on Export (DTRE) for import or local purchase of various items including packaging material.

The exporters would import packaging material free of customs duty and sales tax under the said scheme and there would be no need for them to make purchases either from registered suppliers or from unregistered suppliers, they added.

This would cause loss of local economic activity resulting in huge revenue loss to the national exchequer, they said.

It is worthwhile to mention here that the SRO 1125(I)/2011 entails that no exemption or exclusion is available anymore to the zero-rated supplies, as supplies to unregistered persons involves risk of local consumption. The FBR had issued its viewpoint to the textile sector on the anomalies in SRO 491(I)/2016, which allowed zero-rating of sale tax to five export oriented sectors, they said.

The amendment to SRO 1125(I)/2011 on November 31, 2011 was introduced through SRO 491(I)/2016 on June 30, 2016, under which the input tax credit or refund of packing material of all sorts was disallowed. The LCCI had been protesting against it since its implementation.