3.5 percent WHT exemption: oil ..

he Federal Board of Revenue has granted exemption of 3. 5 percent withholding tax to certain categories of taxpayers including oil tankers and purchasers of agricultural produce and reduced rate of withholding tax up to one percent on steel melters under section 153 (1) (a) of the Income Tax Ordinance 2001.

153(1)(a) of the Income Tax Ordinance, 2001 against cash payments made for meeting the incidental expenses of a business trip to the crew of Oil Tanker. The rate of exemption is 3. 5 percent in the said case of oil tankers. According to sources, the steel melters have also been allowed to deduct withholding tax at reduced rate of one percent under section 153(1)(a) of the Income Tax Ordinance, 2001 on account of local purchases of steel scrap. The said benefit is granted subject to fulfilment of condition to opt Sales Tax Special Procedure and filing of tax returns under the Special Procedure scheme. The rate of withholding tax has been reduced from 3. 5 to one percent. Through the notification, sources said that any purchase of agricultural produce directly purchased from grower has been exempted from provisions of withholding tax under section 153(1)(a) of the Income Tax Ordinance, 2001. Besides this specific exclusion from provision of Section 21(L) of the Income Tax Ordinance, 2001 has also been allowed to purchaser of agricultural produce meaning thereby payments made in cash shall also be treated as admissible deduction against the statutory inadmissibility under section 21(L). As per SRO. 787(I)/2011, the provisions of clause (I) of section 21 and clause (a) of sub section (1) of section 153 shall not apply where agricultural produce is purchased directly from the grower of such produce, subject to provision of a certificate by the grower to the withholding agent in the prescribed format. The certificate to be filed by the grower of agricultural produce would specify the CNIC Number of the person who has sold agricultural produce. The information would also include name of agricultural produce like wheat, rice, cotton, sugarcane etc. The quantity, total price and land identification would also be submitted in the form. The notification further said that the provisions of clause (a) of sub section (1) of section 153 shall not apply only in case of cash payments made for meeting the incidental expenses of a business trip to the crew of oil tanker. This exemption shall not apply in case of any other payments made by owners of oil tankers. The withholding tax under clause (a) of sub section (1) of section 153 shall be deductible at one percent on local purchase of steel scrap by those steel melters who have opted under Sales Tax Special Procedures and are compliantly filing returns under the said scheme, the notification added.

In this connection, the FBR has issued an SRO. 787(I)/2011 here on Wednesday. Sources told Business Recorder here on Wednesday that the owners of oil tankers have been granted exemption from provisions of withholding tax under section