ISLAMABAD (November 26 2002) : Allowing bulk import of gold across the board, the government has decided in principle to maintain the rate of withholding income tax ie Rs 2 per ten gram from 2002-03, previously charged on regulated import of gold, official sources told Business Recorder on Monday.
Justifying the decision to levy same tax on both restricted and free import of gold, the officials expressed apprehension that the imposition of income tax at the standard rate of 6 percent on the import of gold in bulk would encourage large-scale smuggling of gold, particularly from UAE. Keeping this in view, the government may retain the same rate of Rs 2 per 10 gram on the general import of gold.
Secondly, slapping enhanced rates could also have negative effect on the import of gold in bulk.
The bulk imports of gold are controlled through licensing by Ministry of Commerce, even though in such cases importer arranges for his own foreign exchange. Six companies were given licences for such import of gold. Trade Policy 2002-03 decided to do away with the licensing requirement and allowed import of gold/silver in bulk so long as the importer manages his own foreign exchange.
The new importers were persistently demanding of the tax authorities to clarify the rate of income tax to be charged on the import of gold under the trade policy 2002-03.
Now, as everybody is entitled to import gold, the department is considering to maintain the previous rate on the import of this precious item, sources said.
Ministry of Commerce has sought the opinion of Central Board of Revenue (CBR) for the notification of the new rates on the general import of gold. However, the CBR would formally move a summary to the Ministry of Finance for approval of the rate and afterwards notify the decision in consultation with the commerce ministry.