A proposal has been piloted to curtail the 5 percent tax on the import of gold to 0.05 percent in the budget for the fiscal year 2014-15 to stem its smuggling.
Sources said the proposal is under consideration to clamp 0.05 percent tax on imported gold in the upcoming budget under Section 148 of Income Tax Ordinance 2001 provided this quantity of gold is imported for the purpose of sale in Pakistan Mercantile Exchange Limited.
Sources said the tax at the rate of Rs 2 per tolla was collected on the import of gold for commercial purposes in the beginning which was scaled up to one percent in the budget for the financial year 2006-07. The tax remained in vogue at the rate of one percent till February 2013 under 13-G of part two of second schedule of income tax ordinance 2001. Following the repeal of 13-G, the tax at the rate of 5 percent was imposed on the import of gold under Section 148 of the said ordinance.
The sources said the tax collection witnessed a sharp dip under this head when tax was being charged at the rate of one percent. The situation exacerbated further following the imposition of tax at the rate of 5 percent. In the aftermath of this situation, the proposal has been floated to levy tax at the rate of 0.05 percent from the financial year 2014-15.
The sources said on one hand the government was suffering set back in collection of tax due to documented import of the gold and on the other hand the traders of PMEX were hovering on the receiving end in the face of payment of full tax. The proposed rate of tax on the import of gold will ensure the legal import of gold besides documenting the gold trade.
