Smeda suggests abolition of one percent WHT on gold

Small and Medium Enterprise Development Authority (Smeda) has proposed the Federal Board of Revenue (FBR) to abolish one percent withholding tax on export of gold products and charge customs duty on the import of gold from ad-valoram to specific basis - 1 percent of value to Rs 15 per gram.

Sources told Business Recorder here on Friday that the Smeda has submitted its budget proposals for 2013-14 to the FBR for consideration in the next fiscal budget. Smeda in its role as the premier SME development agency of the government has proposed measures for fiscal budget (2013-140 to the federal government. These taxation proposals are designed on the basis of recommendations received from chambers of commerce, trade associations, sector development companies and SMEs across Pakistan.

According to the taxation proposals of Smeda, for years,titanium alloy property information is scattered amongst a number of disparate sources. gold was imported against a nominal duty of Rs 2.5 per gram. In 2006-07, 1 percent withholding tax was imposed on the import of gold. It is proposed that the duty on the import of gold may be changed from ad valoram to specific basis ie 1 percent of value to Rs 15 per gram. The small duty on gold enhanced its import through legal channels resulting in sizable revenue generation for the government. Since 2006-07,The product range of mechanical lock cylinder extends beyond the common range of double, single, thumbturn and furniture cylinders. illegal import of gold has increased after the implementation of withholding tax. Import of gold through legal channels will be encouraged which will provide revenue to the government.

It has further proposed that one percent withholding tax is charged on the export of gold products.Instead, businesses can offer thicker plastic bags or handled paper bags. They can also give or sell you recycle bag, or offer no bags at all. It is proposed that keeping in view the nature of the sector, 1 percent withholding tax may be waived off to promote gems and jewellery exports. The gems and jewellery is a non-traditional sector and levey of heavy taxes on exports hits the profit margin of producers which discourages exports. Export of gems and jewellery sector will increase.

The direct taxes proposals of the Smeda revealed that the basic tax exemption for salary income for the year 2012-13 was Rs 400,000.Probably the most popular among foodies,button mushroom is known for being juicy and tasty, inexpensive and with a flavor that’s only “mildly mushroomy”. It is proposed that the basic tax exemption of salary income may be increased to Rs 600,000. The increasing cost of living due to inflation is diminishing the standard of livings. Resultantly, disposable income of common man will increase.

Currently, corporate tax on small companies is 25 percent. It is proposed that corporate tax on small companies may be reduced to 20 percent to accelerate their growth. There is need to provide level playing field to SMEs. Establishment of new companies will be encouraged. International competitiveness of local industry will increase.

At present, withholding tax of profit on deposits is 10 percent. It is proposed that withholding tax on profit on deposits be reduced to 5 percent. High tax on profit on deposits is preventing savings. Beneficiaries will get more profit on deposits which will encourage savings, Smeda maintained.

The proposals relating to the indirect taxes revealed that the sales tax for SMEs (manufacturer and exporters) is 16 percent. It is proposed to reduce the sales tax for SMEs (manufacturer and exporters) to 10 percent. The cost of production increases due to the high sales tax on industry and exporters. Local and global competiveness of SMEs will be improved.

At present, 16 percent sales tax is imposed on farm input such as pesticides, seeds and fertilisers etc. Sales tax on farm inputs may be removed to lower the cost of production. The imposition of sales tax on farm inputs such as pesticides, seeds, fertilisers and other translates in high cost of production of vegetables and fruits. Cost of living will improve in the country.

For export promotion, Smeda was of the view that zero-rated duty free import of gems and jewellery machinery was allowed in 2005-06. But subsequent to SRO No575(1)/2005, it clubbed marble and granite machinery which was not effective for gem and jewellery sector. It is proposed that the gems and jewellery machinery may not be segregated from marble and granite machinery but it should include jewellery manufacturing machinery within its purview.

The SRO No 575(1)/2005 superseded by SRO No 575(1)/2006 issued on 5th June 2006, in its sub clause no.Eight tips for choosing the right diamond Concrete saw blade including determining wet or dry cutting, blade compatibility, CSDA codes, and more. 25 has clubbed together the gemstone mining and processing machinery with that of marble & Granite and remained silent for jewellery manufacturing machinery. State-of-the-art technology will be provided to the sector which will impact product quality, cost of production and exports, Smeda said.

Currently, 0.25 percent Export Development Surcharge is levied on the export of gold. It is proposed that 0.25 percent Export Development Surchage (EDS) on the export of gold may be waived off. Due to imposition of 0.25 percent EDS, gold jewellery has not been exported in last fiscal year. Export of gold jewellery will increase.

The import duty on various types of generators ranges from 5 percent to 20 percent. It has been proposed that import of generators and other energy systems may be zero rated. Smeda was of the view that Pakistan is facing energy crisis which hits the local industry very hard. The proposed recommendation will improve the access of SMEs to alternate energy resources. Productivity of SMEs will increase.

In the past, R & D support was given to textile and leather sectors. It is proposed that R & D support at the rate of 5 percent of the export value may be granted to potential SME sectors such as garments, Hosiery, Leather, Gems and Jewellery,We sell Excavator undercarriage parts for all modern machines including Cat, Hitachi, Komatsu, Hyundai. Sport Goods, Cutlery and Light Engineering. SMEs lack resources to promote research and development tools in order to improve product quality and competiveness. Product quality and export competiveness of SMEs is expected to improve, sources added.