Abdul Wajid Khan

The Senate Standing Committee on Finance has directed the Federal Board of Revenue (FBR) to amicably resolve the legitimate issues of the marble industry with the consultation of all stakeholders, WealthPK reports.

According to a report, the committee of the upper house held a meeting to discuss the taxation issues faced by the the marble industry in the country. Senator Fida Muhammad informed the panel that tax-related issues were affecting the business of the marble industry in the country, particularly located in Mohmand and Buner districts of Khyber Pakhtunkhwa.

He said that the biggest marble industries of the country are located in Khyber Pakhtunkhwa and Balochistan provinces that provide jobs to local people in a large number. The genuine issues of the industry should be resolved on a priority basis.

FBR explained its position, in a brief presented to the committee, regarding imposition of sales tax on the industry. It said that in the financial year 2016-17, through amendment in the Sales Tax Special Procedure Rule, 2007, special procedure was introduced for the industry.

Through the amended rule, sales tax was imposed on marble industry at a rate of Rs1.25/KWH of electricity consumed by it instead of the standard rate of 17%. However, tax collection under that procedure was nominal, said FBR.

It said while finalising the budgetary measures for Finance Act, 2019, it was decided that all special procedures would be done away with and instead normal sales tax regime would be introduced for those sectors including marble industry.

As a result, not only the special procedure for marble and granite industry but also for steel, ghee cooking oil and cotton seed oil were abolished. The move was aimed at simplifying sales tax regime and eliminating complexities created by the introduction of special procedures.

FBR said that sales tax at a rate of 17% was applicable to all the products. The decision is applicable to marble and granite industry in the entire country and not just in Khyber Pakhtunkhwa and Balochistan.

It told the meeting that under the Income Tax Ordinance, a marble company was charged at a rate of 29 percent of its taxable income. For individuals and associations of persons (AoPs), tax rate was zero% if their annual income does not exceed Rs600,000, it said. It added that tax rate for them was 5% if their income reached Rs800,000.

“If their taxable income exceeds Rs800,000 but does not exceed Rs1,200,000, the tax rate is Rs10,000 plus12.5% of the amount exceeding Rs800,000,” said FBR.

When their taxable income exceeds Rs1,200,000 but does not exceed Rs2,400,000, the tax rate for them is Rs60,000 plus17.5% of the amount exceeding Rs1,200,000.

The meeting was told that the rate of tax for individuals was Rs270,000 plus22.5% of the amount exceeding Rs2,400,000 when their taxable income exceeded Rs2,400,000 but did not cross Rs3,000,000.

Similarly, they are charged at a rate of Rs405,000 plus27.5% of the amount exceeding Rs3,000,000 when their income exceeds Rs3,000,000 but does not exceed Rs4,000,000. When their taxable income exceeds Rs4,000,000 but does not cross Rs6,000,000, the rate of tax for them is Rs680,000 plus 32.5% of the amount exceeding Rs4,000,000.

FBR told the committee that the individuals associated with the marble industry had to pay income tax at a rate of Rs1,330,000 plus 35% of the amount exceeding Rs6,000,000 when their income exceeded Rs6,000,000.

The meeting was told that presently no special tax regime was intact in the country under Income Tax Ordinance, 2001.

Credit: Independent News Pakistan-WealthPak

However, the committee directed the FBR officials to arrange a meeting with all the stakeholders to explain to them the situation of marble industry in the said areas and amicably resolve their issues. It ordered the officials to report back to the committee after resolving the issues of marble industry, said the report, available with WealthPK.