FPCCI proposes amendment to WHT on promotional material

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested amendment in Section 156 for withholding tax on promotional material; however 20 percent tax chargeable on prizes given to the consumers while considering it as business income; which is harsh and unjustifiable.
The apex trade body said in its budget proposals 2018/2019 that necessary amendment may be made in Section 156 by inserting following Explanation: “The Prize means winning by chance and does not include payments either in cash or in kind to any person on achieving sales target or promotion of business.”
The federation said that manufacturing units they give away prizes including free of cost goods given to the distributors, wholesaler and retailers on achieving their sales target, to promote their sales. In our humble view such incentives are covered under Section 18(1)(d) of the Ordinance and chargeable to tax as business income and not income from prizes and winning as envisaged under Section 156 of the Ordinance.
It further added that under Section 156 of the Ordinance tax is deducted at 20 percent by the taxpayer on prizes given to the customers and tax is recoverable by the tax authorities from the taxpayers, even on the value of free goods given to their customers, which is not practicable, harsh and unjustifiable.

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