ISLAMABAD (July 06 2005): The Central Board of Revenue (CBR) has withdrawn the facility for the manufacturers-cum-suppliers to operate under Presumptive Tax Regime (PTR) due to its misuse, resulting in revenue leakage.
The Income Tax Circular 1 of 2005 has explained that manufacturers of goods could exercise the choice to opt for PTR pertaining to payments on account of supply of goods manufactured by them from which tax was deductible under Section 153 of the Income Tax Ordinance 2001.
It was observed that the manufacturers were invariably opting for PTR only when the final tax liability under the PTR worked out to a lesser figure as compared to the tax liability which would be payable if they were taxed under the normal tax regime on their taxable profits.
This misuse of concession was considered undesirable, especially in case of some fully documented large corporate companies, which were not paying taxes in accordance with their book profits.
Accordingly Clause (40) has been omitted with retrospective effect. At the same time, a new Sub-section (6A) has been inserted in Section 153, also with retrospective effect, so that the option available to manufacturers-cum-suppliers stands withdrawn retrospectively. It has also been provided that any past decisions/judgements of a court or a tribunal or an income tax authority would not have any effect whatsoever.
The intent is to forestall any future leakage of revenues and also to retrieve the revenue already lost. The option already filed by the taxpayers would automatically stand rescinded, the CBR added.