Malpractices by some tea importers are damaging the national economy, PTA

KARACHI: The office-bearers of Pakistan Tea Association (PTA) Mr. Muhammad Aman Paracha, former Chairman, Mr. Zeeshan Maqsood, and the Convener Standing Committee (SVC) of Tea in The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) have expressed their concerns over the malpractices being carried out by some tea traders.

They have also requested the Government to take action against those who are involved.

For an upcoming budget, they said, tea should be given the essential status of a common man’s drink rather than being a Luxury since it is so.

Pakistani people, be it upper class, lower class, or any class at all, prefer tea rather than any other beverages.

However, in the meeting on Saturday, the committee also suggested that the duties and taxes should be revised as in:

  • Customs Duty: 5%
  • ST: 7%
  • WHT: 2%
  • ACD: 0%

The Chairman, Muhammad Aman Paracha, said that “tea is raw imported from various countries blended and processed and available to end-users”.

“Therefore, it shall be treated as raw for all rather to selective importers,” he added.

He suggested that “2% withholding tax must be charged from every tea importers. tea importers are also paying 30% value addition at the port stage, like retail or end-user tax, that is on account of the minimum retail price, (mrp).”

It was also pointed out in the meeting that the SRO 450 which is meant for re-export of tea after value addition, the importers who have an exemption of this particular SRO, are misusing this exemption.

They also highlighted the issue and said that “these importers are selling teas to various cities across the country without any documents. Though the teas imported meant for reexport, these teas are imported at zero-rated duties and taxes.”

This is noticed that these teas are not even going to specific warehouses and cities. Therefore, these malpractices are causing a huge loss of revenue and discouraging the importers who are paying full duties.

The meeting also demanded that an efficacious system should be adopted by the relevant FBR authorities and should strictly be monitored, to address the issue.

The authorities can make sure whether teas are going to their respective registered destinies or not and are re-exported as per directions in this specific SRO.

PTA representatives showed fear if these exemptions will continue to take place then the legitimate business will come to halt and everyone will try to get such exemptions.

This could pose a serious threat to the state’s revenue which will result in escalating revenue loss.

Moreover, a few importers were able to get various tax exemptions for PATA/FATA & Azad Kashmir, etc which is also being misused.

This is observed that teas imported exemptions are also going to other cities rather than to desired areas. This must be monitored strictly as well.

The role and objective of the PTA are to promote legitimate trade and highlight the anomalies which are posing a serious threat to national revenue.

What is the issue?

The core issue is that  “SRO 450” tea is also in this SRO. Basically, this SRO is meant for re-export of the tea after value addition. Teas imported under this SRO at zero rates are not even going to specific registered cities and warehouses.

This SRO being widely misused by the importers. These importers are selling teas across the country without any documents. Another issue is that various tax exemptions are extended to FATA/PATA, Azad Kashmir, etc.

This is causing a huge loss of revenue & discouraging the importers who are paying full duties & taxes.

Tea should be eliminated from SRO 450 or an effective system shall be adopted by authorities to prevent a huge loss of revenue.

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