20 percent excise duty on cement may be waived

[Naveed Yaseen]

ISLAMABAD (July 12 2008): The government is likely to withdraw recent increase of 20 percent in federal excise duty on cement because of its negative impact on the construction industry, sources told Business Recorder. The government raised FED by Rs 150 per ton to Rs 900, from Rs 750 in the budget besides enhancing the general sales tax on the commodity by one percent.

On Friday, a marathon discussion was held in Islamabad between the officials of the industries ministry and representatives of All Pakistan Cement Manufactures Association (APCMA) to evolve a consensus on future course, sources added.

The main purpose of these parleys was to convince the government that an increase in FED was not justified and was hurting the construction industry badly, sources said. Price of cement in the local market has been steadily rising and presently the average price stays around Rs 315 per 50 kg. However, in Quetta, price is Rs 370 followed by Karachi at Rs 315 and Hyderabad Rs 305.

Sources said the industries ministry is expected to submit a summary to the Economic Co-ordination Committee (ECC) of the Cabinet in consultation with Federal Board of Revenue, suggesting that the increase in FED may be withdrawn. They said that increase in FED is not logical; if there is no FED levy on cement currently being exported to other countries like India and Afghanistan then why is the local construction industry being penalised?

Marking fee, levied by the ministry of science and technology, is additional taxation on the industry, which is imposed at the rate of 0.1 percent of ex-factory price and if calculated in terms of the rupee, it tantamount to Rs 3 per bag. Industry sources claimed that with an increase in GST and FED, the tax impact on cement has risen to Rs 85 per bag from July 1, 2008, while earlier it was Rs 73 per bag.

http://www.brecorder.com/index.php?id=768344