The finance bill of 2009 tabled a proposal to amend sub-section (4) of Section 134 by substituting the tax deducted as a “minimum tax” which was hitherto deemed as a “final tax”. In short, if the bill is passed, the exporter will have to carry the burden of a new tax regime which would be based on commodity and its volume.

Apart from the amendment, in regards with exports to Afghanistan which is normally against cash, the proposed Bill has also introduced a new sub-section (3c) authorizes customs to collect tax at the time of clearance of goods exported at one percent of the gross amount of such goods.

The bill aims at streamlining the tax system especially by legislation that could bring all transactions under the tax net, and thereby to increase export tax revenue of the country. Hereafter, the exports without a letter of credit against a contract for which payment may be tendered through non-banking channels needed to be brought within the tax net.

Though there is no evaluation conducted on the pros and cons of the provision of “final tax” that has been in effect since 1992, exporters fear that in the present circumstances it would be hard to sustain in the market with any extra liabilities. Industry experts averred that taking into account the falling global demand for most goods any such move would only serve as a roadblock to export earnings of the country.

Toboc Trade News

According to Pakistan’s food and agriculture ministry, bringing higher acreage of land under cultivation and perfect climatic conditions have helped the country to hope for a higher yield this year around. Pakistan consumes about 22mn tons of wheat per annum, farmers are expecting a bumper crop this year at about 24mn tons.

On the other hand, bumper harvests consecutively for the second year have assisted India to augment its stockpiles for about 30mn tons until early this month, increasing by two-thirds from a year ago. India procures its wheat from farmers for a minimum floor price of $225 per ton. The floor price is fixed for wheat and several other crops to the farmers to avoid incurring losses in case of lower yields or crop failures.

While India offloads 2mn ton surplus wheat, about half a million ton of Pakistani wheat would be heading to the Gulf region and Afghanistan. Pakistan is allowing wheat exports after the procurement of the same reached 8mn tons this year, the highest in seven years.

Indian traders are expecting a subsidy from the government to sell wheat and wheat products for a competitive price as international wheat prices is lower or about equal including cost and freight to the Southeast Asian region. Nevertheless, the wheat traders will export to their neighbouring countries including Bangladesh and Nepal since they are closer to the wheat procurement sites of the bordering Indian state, Bihar. Trade Secretary G.K. Pillai said exports would be allowed through select ports to keep a check on how much wheat was being exported.

Toboc Trade News