TFA Consultant

Finance Act 2012 has imposed 0.5 percent adjustable withholding tax on the gross sales to all dealers, distributors and wholesalers irrespective of whether they are registered or unregistered taxpayers with income tax or sales tax. In this connection, the FBR has issued income tax circular number 1 of 2012 on Saturday to clarify new Section 153A of the Income Tax Ordinance, 2001 inserted through Finance Act 2012.

The FBR has conveyed to the business community that the retailers or final consumers will however not be liable to withholding tax under this section of the Income Tax Ordinance 2001. According to the income tax circular, Finance Act 2012 has inserted a new Section 153A of the Income Tax Ordinance, 2001 whereby every manufacturer has to collect withholding tax @ 0.5 percent at the time of sale, of the gross sales to all distributors, dealers and wholesalers. The FBR has clarified that this adjustable withholding tax is leviable on the gross sales to all dealers, distributors and wholesalers irrespective of whether they are registered or unregistered taxpayers with Income Tax or Sales Tax.

The gross sales will be inclusive of Sales Tax and Federal Excise Duty and any trade discount shown on the invoices or bills. The retailers or final consumers will however not be liable to withholding tax under this section. Commission agents from whom tax under section 233 has been withheld shall also not be liable to collection of tax under section 153A, the FBR added.
Copyright Business Recorder, 2012