Daily Times

MIRPUR (AJK),: Seeking immediate relief from the government of Pakistan, the business community of Azad Jammu Kashmir on Friday called for early withdrawal of recent amendments by FBR in the tax laws for tax-exempted territory of AJK for the survival of the local industrial sector.

The AJK business fraternity Friday feared complete collapse of business and industrial sector in the tax-exempted territory of Azad Jammu & Kashmir following the promulgation of an S.R.O by the Federal Board of Revenue (FBR) imposing the sales tax on the supplies of taxable goods brought from tax-exempted areas into taxable areas including Azad Jammu Kashmir.

The business community of AJK has termed it a black day for Azad Jammu & Kashmir’s economy fearing that the step will undermine the industrial progress besides the socio- economic growth in the State.

The S.R.O. 96 (1)12021, issued on 26th January, 2021 says “In exercise of the powers conferred by section 50 of the Sales Tax Act, 1990, read with section 3, sub section (2) of section 22, section 23, section 26, section 33 and section 40D thereof, the Federal Board of Revenue is pleased to direct that the following further amendments shall be made in the Sales Tax Rules, 2006, namely:— In the aforesaid rules,— (1) after rule 69, the following new Chapter shall be inserted, namely: – “CHAPTER X-A SUPPLY FROM TAX EXEMPT AREAS Application. — The provisions of this Chapter shall apply to the supplies of taxable goods brought from tax-exempt areas into taxable areas.

Talking to journalists here on Friday, the local business community leaders said that AJK state was already lacking the industries and required infra-structure in the industrial areas due to its particular geographical layout and lack of resources.
“We strongly condemn this step and request the government of Pakistan to immediately intervene withdrawing the amendment in the above tax laws under the aforesaid S.R.O.
He continued that due to mitigate these effects and encourage the investments in the industrial sector, the Govt of AJ&K developed Industrial Estates in various parts of AJK particularly in Mirpur and Bhimbher districts of Mirpur division offering incentives including Tax exemptions etc. for newly-established industries with prime focus to boost the Industrial activity.

Resultantly many industrial units were installed. These industrial units not only provided the employment opportunities for the jobless skilled and unskilled manpower but also attractively contributed to the Govt exchequer in form of due taxes.
The local business community leaders said that since the Federal Board of Revenue (FBR) has notified, vide SRO # 96(1)2021 on 26 January 2021, the mechanism to establish check posts and imposed the Tax regime as in other areas, all goods carrying vehicles entering Pakistan territory will be checked for the tax papers.

They observed that following the above exercise under the aforesaid S.R.O, and as in AJK the Sales Tax on the local production / finished goods was exempted, the locally (AJK) produced goods could not be entered into the territory of Pakistan – rather could be confiscated by the authorities as a result of imposition of the above mentioned S.R.O, he underlined.
They further said that the enforcement of unilateral withdrawal of a facility / incentive will leave drastic effects on the industrial / economic activities in the industrial areas of Azad Jammu Kashmir.

They further said that since the lack of infrastructure and resources was partially compensated by the incentive in form of the tax holidays for AJK’s productions, the aforesaid draw backs will have deep negative impact forcing industries to shut down their operations – turning the existing industrial areas of AJK into the graveyards of the industrial. “That will also cause emerging of wide spread un employment and huge loss of revenue to the AJK State government”, they maintained.

The Trader and industrialists community further said that moreover it was also an issue of national importance as declaring the supply of locally (AJK) produced goods as import from Pakistan, might create the sense of alienate the Kashmiri populace from the National stream.