If the Board had implemented this documentation measure in its true spirit in 2012-13, the FBR would have been in a position to collect particulars of those distributors to whom supply have been made by manufacturers. The manufactures would have to collect particulars of their buyers at every stage of the supply chain. The CNIC has to be mentioned in the prescribed statement for documentation purposes.
The second major objective of revenue generation would also be achieved through the implementation of the said section of the Ordinance 2001. Sources said that according to section 153A of the Income Tax Ordinance, 2001 whereby every manufacturer has to collect withholding tax at the time of sale to all distributors, dealers and wholesalers is expected to be restored by the FBR from July 1, 2013. This unique documentation measure was the brainchild of former FBR Member Inland Revenue Shahid Hussain Asad, who intended to achieve the objectives of both documentation and revenue generation through section 153A of the Income Tax Ordinance, 2001.
Sources further said that the FBR had issued SRO1487(I)/2012 to suspend the applicability of the major documentation measure till June 30, 2013. Under the notification, in exercise of powers conferred under section 53(2) a new clause 80 has been added to Part IV of the Second Schedule to the Income Tax Ordinance, 2001. "The provisions of Section 153A of the Income Tax Ordinance, 2001 shall not apply to any manufacturer till June 30, 2013," the notification added.
Sources said that the SRO1487(I)/2012 would expire on July 1, 2013 and documentation measure would be restored from next fiscal year (2013-14). So far, the FBR has no plan to permanently delete section 153A of the Income Tax Ordinance, 2001. The Finance Act, 2012 had inserted a new Section 153A of the Income Tax Ordinance, 2001 whereby every manufacturer has to collect withholding tax at the time of sale to all distributors, dealers and wholesalers. This adjustable withholding tax was leviable on the gross sales to all dealers, distributors and wholesalers whether they are registered or unregistered taxpayers with Income Tax or Sales Tax.