Daily Times

KARACHI: The Federal Board of Revenue (FBR) on Thursday has communicated to all the chief commissioners of regional tax offices and large taxpayers units that special exemption has been allowed to growers of agricultural produce. ‘I am directed to state that different representatives of flour mills and trade bodies have raised the issue of income tax deduction on purchase of agricultural produce/ wheat from growers, commission agents and has sought clarification on this matter,’ said Rabia Durrani, secretary income tax policy in a statement. She mentioned that the Federal Board of Revenue has already clarified the legal position on this subject as the person purchasing agricultural produce through a commission agent shall be required to deduct advance tax at 10% on the amount of commission paid to the agent and further tax will not be deductible on such transactions. The grower making sales through such commission agents shall also not be required to furnish the prescribed certificate. Exemptions provided under sub clause (a) of clause (12) of Part- IV of Second Schedule to the Ordinance, is not available to the traders of agricultural produce and withholding tax shall be deductable from them at the prescribed rates. The above circular explains that no advance income tax uls 153(1)(a) be deducted in case the purchase of agricultural produce is made directly from growers making sales through commission agents. However, withholding tax uls 233 shall apply on the amount of commission paid to the commission agent. Meanwhile, if the purchase of agricultural produce is made from the traders then the withholding tax uls 153 shall apply. The FBR has notified to commissioners of regional tax offices and large taxpayers units to direct all field formations to follow and implement the directions of the board as conveyed through Circular No 10 of 2011 in this regard.