Relief Measures for Utility Stores and Import of Pulses

COVID-19 is no doubt the biggest health crisis our generation has faced. Governments all over the globe are announcing historic economic relief packages for businesses. Government of Pakistan has also introduced certain tax relief measures for Utility Stores Corporation and import of pulses.

These relief measures have been introduced in Second Schedule of the Income Tax Ordinance, 2001. First relief measure has been introduced in Part II of the Second Schedule. And, the second one has been made in Part IV of the said Schedule.

Part II provides taxation of incomes and persons at reduced rates. And, incomes and persons mentioned in Part IV are exempt from the operation of respective provisions of the Ordinance. Government of Pakistan has introduced relief measure for Utility Stores Corporation in Part II and regarding import of pulses, in Part IV.

For this purpose, an amendment has been introduced in the Ordinance through S.R.O. 287(I)/2020 dated April 7, 2020.

Relief Measure for Utility Stores Corporation (Clause 24CA of Part II)

This relief measure is available to individuals and associations of persons (AOPs) supplying tea, spices, salt, dry milk, sugar, pulses, wheat flour and ghee to Utility Stores Corporation of Pakistan. Through the amendment, Government has reduced withholding tax rate under section 153(1)(a) of these items to 1.5%. This relief, however, is not available to the companies and tea, spices, salt and dry milk sold under a brand name.

Another important thing to consider is that this amendment shall not apply in those cases where rate of withholding tax is already below 1.5%.

Relief Measure for Import of Pulses (Clause 12C of Part IV)

Under normal circumstances, import of pulses is subject to payment of advance tax at 2%. This advance tax is deducted under section 148 of the Ordinance at the time of import. Through the relief measure, Government has exempted import of pulses from payment of income tax at import stage.

Please note that both of the above relief measures are for a limited time period. The Government has granted this relief for the period from April 7, 2020 to June 30, 2020.

Given the economic conditions amid COVID-19, the Government MUST reconsider the relief measures at the time of preparing fiscal budget 2020. What are your views on these tax relief measures for Utility Stores Corporation and import of pulses?