Ginners To Pay Withholding Tax On Cotton Lint
Thursday, September 11, 2008 at 9:46 am Under Business News 49 views
ISLAMABAD:The Federal Board of Revenue (FBR) on Wednesday announced that the withholding tax deductible on the amount of cotton lint supplied by the cotton ginners to the textile industry would be paid by cotton ginners themselves. The FBR has issued income tax circular No 11 of 2008 to clarify issues pertaining to payment of tax by cotton ginners.
The FBR has taken the decision to facilitate the cotton ginners, who were facing problems in the verification of tax withheld by the textile industry. According to the circular, the textile industry on the purchase of cotton lint from the cotton ginners, being “prescribed person” is obliged under sub-section (9) of section 153 of the Income Tax Ordinance, 2001 to withhold tax under subsection (1) of the aforesaid section, as per reduced rate notified by the Board vide SRO No 600(I)/91 dated July 2, 1991 (as amended from time to time), deposit the same in the government treasury and provide a copy of the said challan to the cotton ginners.
Subsequently, the Pakistan Cotton Ginners’ Association (PCGA) has held a meeting with the Board on August 9, 2008 and apprised that they are facing acute problems in the verification of tax withheld by the textile industry.
Therefore, the FBR has decided that henceforth, in accordance with the provisions of clause (bb) of sub-section (5) of section 153 of the Ordinance, the tax deductible on the amount of cotton lint supplied by the cotton ginners to the textile industry shall be paid by cotton ginners themselves and a copy of the paid challan be presented to the buyer of the cotton lint at the time of payment on account of sales/supplies.
In addition to filing of the statement under section 165 of the Ordinance read with rule 56 of the Income Tax Rules, 2002, the buyer’s legal responsibility being “prescribed person” under sub-section (9) of section 153 of the Ordinance would be discharged, when he would record the bank scroll number, date of payment and other necessary details on the invoice of payment.
In case, the details are not recorded on the invoice of payment, the tax paid is not corresponding to the payment made on account of supplies/sales of lint and necessary evidence of payment is not kept by the “prescribed person”, he would be treated assesses in default and necessary proceedings under section 161 of the Ordinance and other provisions of the Ordinance shall be initiated against him by the taxation authorities holding jurisdiction upon the case of buyer, circular added.
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