Increase in WHT on vehicles an act of tyranny and anti-provincial autonomy: Minister E&T

Sameer Nazir

KARACHI: Sindh Minister for Excise and Taxation (E&T) Mukesh Kumar Chawla said the imposition of registration and withholding taxes by the federal government without consulting the provincial government were unacceptable. Federal government had made deliberate attempts to damage the revenue generation at the provincial level by imposing heavy tax on vehicles in form of registration. Federal government had also in past deducted Rs 60.3 million from provincial government’s revenue without taking the provincial government into confidence.

He stated this in a press conference he addressed Saturday at his office in Karachi. E&T Director General Shoaib Ahmed Siddiqui, Director Taxes Shabir Ahmed Shaikh and other officials from E&T department were present.

Chawla said that the federal government had always deducted annual withholding Tax on motor registration under section B-231 of the Income Ordinance for which Rs 7500 was the sum of withholding tax on cars up to 850 CC while Rs 50, 000 was for vehicles up to 2000 CC and other high-end. The federal government had in this current fiscal budget-2014-15 imposed the withholding tax after dividing it in 2 categories and thus the rate of withholding tax was increased from 50 percent to 900 percent.

Resultantly, the withholding tax on vehicles upto 2000 CC had been increased to Rs 150,000 and Rs 250,000 for all vehicles of 3000 CC in income tax category, said the Minister.

The overall increase came to 300 and 500 percent respectively. The rate of withholding tax on non-income tax category had been increased as Rs 300,000 and Rs 450,000 on all vehicles of 2000 CC and 3000 CC respectively. These measures would not only affect the buyers but would also affect the provincial government directly, he said.

While criticizing the federal government, the Minister said that the federal government had made it mandatory for the provincial government to furnish income tax files every month so that the provincial government would prepare files in 2 categories, income tax and non-income tax categories.

He said that the withholding tax was collected once in past but now it would be payable on each transaction on vehicles till next 5 years.

It was not possible for the provincial government to impose the new rate of withholding tax from this current month of Jul-2014 as the provincial government had to make necessary changes in its tax collection electronic software and this would make the process of vehicle registration static and the rate of vehicle transfer would also be impeded grossly, which would affect revenue collection at the provincial government level directly, added the Minister.

The imposition of new rate of withholding tax was a sheer act of tyrant against the masses, which did not have any antecedence in past, lambasted the Minister, adding that the Federal Board of revenue had an intention to make direct interference in E&T departmental matters directly, which was tantamount to suppressing the provincial autonomy.

The Minister said that a summary in this context was being prepared for federal government through Sindh Chief Minister so that the imposition of new rate of withholding tax should be reviewed because the masses were already being crushed under the burden of heavy taxes and the imposition of new rate of withholding tax would further flatten the masses, which should be avoided.

He demanded the federal government to review its policy toward the imposition of taxes with new rates.

The Minister said that the government had in past 11 months collected Rs 29 billion from taxes and the E&T department had during past 5 years raised the tax collection target from Rs 8 billion to Rs 32 billion and it was expected that the collection would cross the target.