KARACHI: The Federal Board of Revenue (FBR) expects to
collect millions of rupees more in revenue from the manufacturers of
aerated water once they are shifted from normal assessment to fixed
capacity regime of sales tax and federal excise duty (FED), official
sources said Friday.
In order to determine real production capacity of aerated water manufacturing units a three-member committee is being constituted by the FBR to carrying out physical verification of production capacity, sources said.
Under Rule 649(1)/2013 it has become mandatory upon every registered manufacturer of aerated water to furnish a production capacity declaration in respect of his unit with the concerned tax collecting authorities.
Similarly, under the sub-rule (1) of rule 3 of rule 649(1) 2013 the declarations furnished will be physically verified by a committee comprising of an officer of inland revenue, not below the rank of deputy commissioner, one member either from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) or Overseas Investors Chamber of Commerce and Industry (OICCI) and a technical member either from the Institute of Engineers of Pakistan or a similar organisation.
The FBR has directed field formations to approach trade bodies and form committees for the verifications of capacity declarations to be made and submitted by the manufacturers of aerated waters in their respective jurisdictions.
Sources said that the FBR normally moves away from normal assessment of tax liability system when it feels that due tax is not being collected from any segment of trade or manufacturing sector.
Consequently, by adopting presumptive tax regime the FBR wants to ensure that tax potential of such sectors could be fully exploited and tax evasion or under assessment could be stopped, official sources added.
Therefore, these sources said that once the manufacturers of aerated waters are shifted to fixed capacity regime it is hoped that the national exchequer will be collecting higher revenue on account of FED and sales tax.
Responding to a question, the FBR official requesting anonymity said in the past a number of manufacturing units of aerated waters were raided by Excise and Taxation Department and caught them removing truck load of world branded beverages (aerated waters) without paying FED. This caused colossal loss of revenue to the national exchequer, he added.
However, after shifting to fixed capacity regime for the levy of FED and Sales Tax, the official said it will minimize the leakages because the capacity of each manufacturing unit of aerated water will be based on the number of filling spouts or filling valves in a factory.
Therefore, the gross amount payable in a year by a registered producer of aerated water will be determined on the basis of annual production capacity of the filling valves and spouts installed in a factory.
The manufacturing units of aerated waters for the purpose of taxation are being categorized on the basis of the origin of filling machines. If a unit have foreign origin filling machines or a mix of foreign and local origin will have to pay highest followed by local origin filling machines and units where total number of filling valves or spouts installed are less than 40.
In order to determine real production capacity of aerated water manufacturing units a three-member committee is being constituted by the FBR to carrying out physical verification of production capacity, sources said.
Under Rule 649(1)/2013 it has become mandatory upon every registered manufacturer of aerated water to furnish a production capacity declaration in respect of his unit with the concerned tax collecting authorities.
Similarly, under the sub-rule (1) of rule 3 of rule 649(1) 2013 the declarations furnished will be physically verified by a committee comprising of an officer of inland revenue, not below the rank of deputy commissioner, one member either from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) or Overseas Investors Chamber of Commerce and Industry (OICCI) and a technical member either from the Institute of Engineers of Pakistan or a similar organisation.
The FBR has directed field formations to approach trade bodies and form committees for the verifications of capacity declarations to be made and submitted by the manufacturers of aerated waters in their respective jurisdictions.
Sources said that the FBR normally moves away from normal assessment of tax liability system when it feels that due tax is not being collected from any segment of trade or manufacturing sector.
Consequently, by adopting presumptive tax regime the FBR wants to ensure that tax potential of such sectors could be fully exploited and tax evasion or under assessment could be stopped, official sources added.
Therefore, these sources said that once the manufacturers of aerated waters are shifted to fixed capacity regime it is hoped that the national exchequer will be collecting higher revenue on account of FED and sales tax.
Responding to a question, the FBR official requesting anonymity said in the past a number of manufacturing units of aerated waters were raided by Excise and Taxation Department and caught them removing truck load of world branded beverages (aerated waters) without paying FED. This caused colossal loss of revenue to the national exchequer, he added.
However, after shifting to fixed capacity regime for the levy of FED and Sales Tax, the official said it will minimize the leakages because the capacity of each manufacturing unit of aerated water will be based on the number of filling spouts or filling valves in a factory.
Therefore, the gross amount payable in a year by a registered producer of aerated water will be determined on the basis of annual production capacity of the filling valves and spouts installed in a factory.
The manufacturing units of aerated waters for the purpose of taxation are being categorized on the basis of the origin of filling machines. If a unit have foreign origin filling machines or a mix of foreign and local origin will have to pay highest followed by local origin filling machines and units where total number of filling valves or spouts installed are less than 40.
