Govt asked to cut tax rate on steel sector

The manufacturers of steel products have asked the government for reduction in minimum tax rate for dealers/distributors from 1.5% to 0.25% on steel sector.

In a letter, written to Minister for Finance Dr Abdul Hafeez Shaikh, Minister for Industries Hamad Azhar and Special Assistant to PM on Revenues Dr Waqar Masood, stating that the manufacturer of steel products are operating on very thin profit margins and the similar earnings’ philosophy rests with the dealers and distributors of steel products.

Thus the existing extortionate rate of minimum tax (1.5%) applicable under Section 113 of the Income Tax Ordinance, 2001 not only discourages the steel manufactures for future investments in the sector but it also becomes additional burden on their cash flows and discourages the supply chain of steel sector (distributor/dealers and retailers/traders) to document their business transactions with the FBR. It is a counter-productive unfair tax that is not likely to produce the desired results.

The letters says, “We have been pursuing this matter since long and in principal there has been an agreement that this is an unfair tax on the documented sector which is already bleeding. So we humbly request your good office to resolve our request in the upcoming ordinance and reduce the minimum tax rate from 1.5% to 0.25% for the dealers/distributors, under Section 113.”