The flour milling industry has decided to resume normal operations after reaching an agreement with the federal government regarding the withholding tax (WHT) mechanism announced in the federal budget.
In negotiations between the federal government and the Pakistan Flour Mills Association (PFMA), both parties agreed that Section 153-A of the Income Tax Act would not apply to flour mills. Instead, flour would be sold under a commission system, according to PFMA chairman Asim Raza. This announcement followed a meeting with Finance Minister Mohammad Aurangzeb and Minister of State for Finance Ali Pervaiz Malik on Monday.
Asim Raza stated that the talks, presided over by Federal Minister of Economic Affairs Ahad Cheema, were successful, leading the flour milling industry nationwide to return to normal operations.
The PFMA chairman and the heads of all four provincial chapters of the association represented the flour millers during the negotiations. Raza explained that under the agreement, 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 apply only to the commission amount.
He added that wholesalers and retailers with annual sales less than Rs100 million would be included in the withholding tax net in the coming year. Additionally, tax reforms on the flour business would be applied to the finance bill for the 2025-26 fiscal year instead of 2024-25.
The flour millers had gone on strike at the onset of Muharram, protesting against being designated as “WHT collection agents.” They postponed the strike after the Punjab government assured them that a meeting with the federal government would be arranged to resolve the issue after Ashura.
The millers argued that flour dealers were unwilling to share their computerized national identity cards and tax status (filer or non-filer) with the mills, making effective WHT collection difficult.
