PCDMA protests against finished goods schedule

KARACHI: Pakistan Chemicals and Dyes Merchants Association (PCDMA) Chairman Amin Yousuf Balgamwala has questioned the inclusion of raw material of chemicals and dyes in the list of finished goods in Budget 2020-21, and asked to revert the decision.

In letters sent to Prime Minister’s Adviser on Trade and Investment Abdul Razzaq Dawood, and to the FBR's Anomaly Committee, Chaired by Ashfaq Tola, PCDMA chairman said there were three parts of Schedule 12 of the Finance Bill 2020.

Part 1 contained capital goods, Part 2 raw materials, and Part 3 finished goods. The letters demanded re-entry of industrial raw materials in Part 2 by maintaining the previous rate of income tax.

Surprisingly, the government has removed several raw materials of chemicals and dyes from Part 2 and included these in Part 3, which was for finished goods. The income tax rate in Part 3 was 5.5 percent, while in Part 1 it was one percent and in Part 2, two percent. “The raw material of chemicals and dyes was earlier listed in Part 2, but adding many raw materials in Part 3 would result in tax on the raw material in terms of finished goods. The rate of income tax on imported goods has been increased by 3.5 percent, which will exclude commercial importers from the import business,” he pointed out.

He feared that if the previous status of raw material was not restored, it would lead to shortage of industrial raw materials and also disrupt production activities, which would ruin exports.

Balgamwala further said that if the manufacturer imports industrial raw materials then the tax rate was less, but when the same raw materials were imported by commercial importers to supply to the industries, more taxes were levied, which was unjustified.

“The manufacturers would take advantage of the lower duty and sell the imported industrial raw materials in the markets, which would result in severe financial losses to the commercial importers who import the raw materials by paying more duty,” he claimed. PCDMA chairman demanded to add chemical and dyes as raw materials in Part 2 and to maintain the previous income tax rate of two percent.