In an open letter to all the trade bodies on October 13, PSIA Chairman M. Amjad Raza said that as a result of those policies, not only the country was suffering revenue loss and industry was being badly affected, but new investment was also totally blocked.
He regretted that despite pleading before the Sales Tax Collectorate in Karachi, the CBR member of Sales Tax, Islamabad, and the CBR Chairman, and drawing their attention towards the problems being faced by industry, although they accepted discrepancies in those policies, they were not ready to amend them.
The SRO 538(1)/2005 is regarded by the PSIA as the biggest impediment in the way of manufacturing industry. Through this SRO, the CBR has advised all the concerned collectorates to consider only export sales for processing of sales tax refund.
As a result, the manufacturing industry, which is trading both in international and local market, is in danger zone as millions of rupees tax paid on purchases made before June 6, are neither adjustable nor refundable as per the SRO, said the PSIA.
Before the budget 2005-06, the PSIA said, the tax paid on purchases was either adjustable or refunded by the CBR, but now the same had been forfeited through the SRO.
The PSIA Chairman, in his letter, also cited SROs 666(1)/2005 and 575(1)/2002, which had caused damage to the industry.
He requested the trade bodies to look into those issues to save the industry from disaster, adding if necessary steps were not taken immediately, the "economy of the country will collapse, which we could not afford."
HE FURTHER SUGGESTED THAT:
-- All the trade related policies must be made with the consent of trade bodies, associations and chambers.
-- If the CBR introduces new policies or procedures, the same should not be implemented overnight. The CBR should provide enough time to the registered persons to understand the new ruling or the procedure, so that blackmailing by the CBR lower staff could be controlled.
-- All the trade related policies must be made for at least one fiscal year so that the industry is able to plan accordingly.
-- The CBR should concentrate on facilitating the tax payers and treating them with respect instead of creating panic and harassment to blackmail them, and
-- The CBR should monitor the losses of the government revenue instead of interfering with the internal matters of the industry.