Cut In Tax On Gold Imports Proposed

26-May-2013

The Securities and Exchange Commission of Pakistan (SECP) has proposed tax incentives on the import of gold being traded on the commodity exchange with a reduced import tax rate to encourage documentation. Sources told Business Recorder on Sunday that this proposal was forwarded by the SECP to the Federal Board of Revenue (FBR) for coming budget (2013-14).



According to the budget proposal, the commission wanted to incentivise documentation of gold import if traded on commodity exchange with a reduced import tax rate (Clause (13G) (iv) of Part II of the Second Schedule to the Income Tax Ordinance 2001).



The SECP proposed that the tax on import of gold was imposed in FY 2006-07 at the rate of 1 percent of the import value. Since the imposition of this tax, the volume of gold imported through proper channels has decreased drastically and the amount of tax collected under this head is also insignificant for the last few years.



A reduced tax rate on import of gold at the rate of Rs 25 per 10 grams of the import value is proposed, provided the gold is imported by a corporate member for trading at the Commodity Exchange. The proposed change in tax will encourage legal import of gold, SECP said.



As the Commodity Exchange provides a regulated market place to buy and sell gold at transparent market prices, it would discourage manipulation by gold traders in the open market. It would promote documentation of trading of gold, against the current huge parallel economy in undocumented trading and resultantly, would increase Government revenues from documented import of gold.



Sources said that a mechanism to curb any misuse of the proposed facility was also shared with FBR last year, including certification containing detailed information from PMEX to avail the tax rebate at import stage and periodic reporting of all gold imports through PMEX to the FBR for comparison with customs data, SECP added.



Under existing provision ie clause (13G) (iv) of Part II of Second Schedule to the Income Tax Ordinance 2001. As per section (13G), the tax under Section 148 on the following item shall be collected at the rate of 1 percent of their import value as increased by customs-duty, sales tax and federal excise duty, if any levied thereon: Gold, mobile telephone sets and silver.



According to the new proposed provision of Clause (13G) (iv) of Part II of Second Schedule to the ITO, 2001, Section(13G), the tax under Section 148 on the following item shall be collected at the rate of 1 percent of their import value as increased by [customs duty, sales tax and federal excise duty, if any levied thereon:



iv. Gold; "Provided that Tax under Section 148 on the import of gold shall be collected at the rate of Rs 25 per ten grams of gold if imported for the purpose of selling at Pakistan Mercantile Exchange Limited," SECP proposal said.

Source:-www.brecorder.com