FBR slashes income tax rate to 0.25% for sugar, cement, and edible oil dealers

• FBR has slashed the income tax rate for dealers and sub-dealers of sugar, cement, and edible oils from 1.5% to 0.25%.
  
• The rate of tax has been reduced through the promulgation of Tax Laws (Amendment) Ordinance, 2021 dated February 12, 2021.
  
• The reduced tax rate has also been extended to wholesalers and retailers.

KARACHI: The Federal Board of Revenue (FBR) has slashed the income tax rate for dealers and sub-dealers of sugar, cement, and edible oils from 1.5% to 0.25%, The News reported, quoting sources on Wednesday.

The rate of tax, which has been reduced through the promulgation of the Tax Laws (Amendment) Ordinance, 2021 dated February 12, 2021, has also been extended to wholesalers and retailers. 

The concession would only be available to dealers and sub-dealers, wholesalers, or retailers if they are already registered under the Sales Tax Act, 1990 or get registered within 60 days of the promulgation of the Amendment Ordinance, 2021.

Those registered after April 11, 2021, will be subject to advance tax at the rate of 0.7%.

In this regard, tax experts underscored that dealers and sub-dealers of sugar, cement, and edible oils are allowed a minimum tax rate of 0.25% under section 113 of Income Tax Ordinance, 2001 — provided they are active taxpayers in terms of relevant provisions of both the Income Tax Ordinance 2001 and Sales Tax Act 1990.

Concessional rates to cover fast moving-goods

In addition, the concessional rate would also cover fertiliser and fast-moving consumer goods which means consumer goods that are supplied in retail marketing as per the daily demand of a consumer excluding durable goods.

Every manufacturer or commercial importer of fertilisers is required to collect advance tax from distributors, dealers, and wholesalers under section 236G of the Ordinance at the rate of 0.7%.

Tax collection under section 236G is adjustable for dealers, distributors, and wholesalers of specified sectors.

The development comes after a tax demand was created against sugar mills. The Large Taxpayers Office (LTO) Karachi, which has jurisdiction over 29 sugar mills, created Rs500 billion worth of tax demand against sugar mills during an audit exercise.

The tax offices started a composite audit of income tax and sales tax of sugar mills in June last year.