LAHORE: The flour milling ind­ustry has decided to normalise its operations after reaching an agreement with the federal government over the issue of withholding tax (WHT) mechanism, which had been announced in the federal budget.

During negotiations between the federal government and the Pakistan Flour Mills Association (PFMA), the two sides agreed that Section 153-A of the Income Tax Act would not apply to flour mills and instead they would sell flour under a commission system, said PFMA chairman Asim Raza in a statement after a meeting with Finance Minister Mohammad Aurangzeb and Minister of State for Finance Ali Pervaiz Malik on Monday.

He said the talks during a meeting, which was presided over Federal Minister of Economic Affairs Ahad Cheema, remained successful after which the flour millers decided that the milling industry across the country would operate as usual.

During the negotiations the flour millers were represented by PFMA chairman and the heads of all four provincial chapters of the association.

Explaining details of the deal, the the PFMA chairman said that flour dealers and retailers would charge a commission per bag for selling flour supplied by the mills and the WHT under the Income Tax Act would be applicable only to the amount of the commission.

He said that wholesalers and ret­a­ilers whose annual sales were less than Rs100 million would be inc­luded in the withholding tax net in the coming year, and that tax ref­o­rms on the flour business would be app­­lied to the finance bill for the next year (2025-26) instead of 2024-25.

Flour millers had gone on strike at the onset of the holy month of Muharram against what they called a move to make them “WHT collection agents”. They postponed the strike on the Punjab government’s assurance that their meeting would be arranged with the federal government to resolve the issue after Ashura.

The millers argued that the flour dealers were not ready to share their computerised national identity cards and tax status (filer or non-filer) with the mills and thus effective collection of WHT was not possible.

Published in Dawn, July 23rd, 2024