ISLAMABAD (July 22 2006): The Central Board of Revenue (CBR) on Friday decided to reduce withholding tax on contract carriage services from 6 percent to 2 percent as full and final tax liability, under the Presumptive Tax Regime.
This was stated by Mohammad Yousuf Shahwani, chairman, All Pakistan Oil Tankers Owners Association (Apotoa), on the conclusion of a daylong meeting with the CBR Chairman Abdullah Yusuf, Member Direct Taxes Salman Nabi and other officials of the Board.
It is learnt that the CBR would move a summary to Prime Minister's Advisor on Finance, Dr Salman Shah, for the reduction of withholding tax from 6 percent to 2 percent for 'contract carriage services'. The rationalisation of withholding tax on services requires amendment in section 153 of Income Tax Ordinance 2001.
Meanwhile, CBR Chairman told Business Recorder that the Board listened to the demands of tanker owners' association, transporters' association and carriage contractors' association, which would be conveyed to the government. Withholding tax would be collected under Presumptive Tax Regime. However, the government would decide about the rate, he added.
Giving details of the meeting, the Apotoa Chairman said that CBR had assured the delegation to restore the pre-budget status of 2 percent withholding tax, keeping in view the hardships being faced by tanker' owners' association and carriage contractors' association.
He said that the Board's decision has saved these sectors from the burden of withholding tax adjustment. Tax officials have also agreed that the levy would not be adjustable, but “full and final tax liability”.
The Board has promised to restore the previous taxation status, as neither the tanker owners have claimed refunds nor played tricks with the tax officials in discharging their tax liability. The sector has been in practice of paying taxes three months in advance.
However, the increase in the withholding tax from 2 to 6 percent was unjustified. The CBR Chairman and income tax officials had agreed to bring down this levy to 2 percent, applicable from July 1, 2006, he added.
Shahwani said that the association had also placed a demand before the tax officials to charge all levies under 'one window' facility from next financial year.
Currently, the tanker owners have to pay a number of taxes including permit tax, insurance, registration fee, route permit, income tax and excise duty. The Board would take up the issue with the respective government departments for payment of these taxes under 'one window' system. Apotoa Chairman said that it was expected that the CBR would soon notify the decision pertaining to the reduction of withholding tax.
The delegation included Jaffar Malik, Secretary General, Apotoa; Abdul Hakim Qualaderhi, All Pakistan Transporters Association; Noor Muhammad Shahwani, goods carriers association; Abdullah Jan, Secretary General, Sarhad Petroleum Oil; Asmat Ullah Afridi, chairman, Sarhad Petroleum and Khalid Jan, Secretary, Sarhad Petroleum, Cartage and Dealers Association.
