Islamabad: The Federal Board of Revenue (FBR) has bound manufacturers of 52 major items to declare actual monthly production data for determining sales tax.
According to the SRO494 of 2015, the manufacturers will now have to file details of production data with the FBR. Several statutory regulatory orders (SROs) were issued on Thursday to give effect to procedural and other decisions in respect of various sectors.
The 52 major commodities/items include sugar, tea, cigarettes, beverages, paper, board, chemicals, caustic soda, toilet soap, flakes and detergent, industrial gases, LPG, natural gas, ceramic tiles, cement, refrigerators, air conditioners, deep freezers, paints/varnishes, biscuit, all kinds of motor vehicles, juices, yarns, petroleum products, iron and steel products, pesticides, fertilisers, storage batteries and power transformers.
Further amendments were made in Sales Tax (Special Procedures) Rules, 2007. Chapter 9 on processing of refund claims filed by the cotton ginners is proposed to be omitted, as it has become redundant since the ginned cotton is no more zero-rated.
To rationalise the present concessionary regime of sales tax rates on the steel sector, the following measures are proposed: sales tax recovered through electricity bills from steel melters and re-rollers has been raised from Rs7 to Rs9 per unit; for ship-breakers, the rate is enhanced from Rs6,700 a tonne to Rs8,000 a tonne of ship plate.
Other sales tax rates for melters and re-rollers using natural gas for their own generation or those paying sales tax on a mill size basis shall be enhanced proportionately. Adjustable sales tax on import at the rate of Rs5,600 a tonne of re-meltable scrap is to be continued at the same rate.
The sales tax on local scrap of these PCT headings is also proposed to be subjected to the same rate of Rs5,600 a tonne. The import of compressor scrap, now classified under a new PCT heading, 7204.4940, is subjected to an un-adjustable sales tax at the rate of Rs5,600 a tonne. Wholesaler-cum-retailers falling under Chapter 13 are given waiver from provisions of section 73 of the Act and allowed to issue tax invoice in respect of specified goods subject to extra tax.
The FBR will only grant sales tax exemption to any entitled organisation or agency under grants-in-aid, which would bring original exemption orders from Economic Affairs Division (EAD). The FBR has issued a new procedure for the organisation or agency under grants-in-Aid availing sales tax exemption through a notification issued on Thursday.
Under the amended rules, any entitled organisation or agency that wants to make exempted import or taking exempted supply from a registered person shall make application to the officer of Inland Revenue having jurisdiction to issue exemption certificate to this effect, provided that the application shall be accompanied by an exemption order in original issued by EAD on the specified format.
Through SRO485 of 2015, the companies, recipients of advertisement services and registered exporters are now required to deposit the amount of sales tax withheld/to be withheld by 15th of each month following the month in which purchases were made (accrual basis).
Earlier, the withholding tax was to be deposited after payment to supplier. The amendments were made in sales tax special procedure (Withholding) Rules, 2007.
Presently, withholding agents are required to deposit sales tax to be withheld by them along with the return for the tax period (month) in which they make payment for the purchases to their suppliers. On the other hand, they adjust input tax on such purchases immediately. It is provided that except for the government sector withholding agents, all other withholding agents should deposit the sales tax amount to be withheld along with the return for the tax period in which purchase is made.
The petroleum dealers of HSD (high-speed diesel) and petrol are excluded from purview of withholding. Exclusion to products like mild steel products, paper in rollers or sheets, plastic products, including pipes, is withdrawn. However, people in the steel sector paying sales tax under special procedure, except those who pay sales tax ad valorem, shall continue to be excluded from provisions of withholding tax.
Through another SRO491 of 2015, the minimum value of assessment of locally produced coal has been enhanced from Rs1,000 a tonne to Rs2,500.
An amendment was made in SRO550 of 2006, through SRO489 of 2015, under which the FBR excluded Federal Excise Duty (FED) on air travel service and carriage of goods by air service from sales tax mode. It means input tax adjustment against these services will not be available.
In SRO1125 of 2011, concessionary rate of 2pc, 3pc and 5pc were applicable to five export-oriented sectors — textile, leather, carpet, surgical and sports goods. The rate of 2pc is being enhanced to 3pc.
The said notification is also being revamped through another notification, SRO486 of 2015, and simplified without disturbing the existing provisions (except withdrawal of reduced rate on maize starch) to facilitate the registered persons as well as field officers. Value-addition tax on commercial imports of these sectors at the rate of 2pc is being reduced to 1pc.
The FED SROs that were rescinded included SRO778 (I) 2006; SRO474 (I) 2009; SRO802 (I) 2009; and SRO81 (I) 2010. These SROs are now part of the schedule of the FED Act.
The sales tax SROs which either have been transposed to the schedules of the Sales Tax Act, 1990 or are redundant included: SRO208 (I) 1998; SRO397 of 2001; SRO77 of 2004; SRO433 of 2005; SRO1007 of 2005; SRO69 of 2006; SRO313 of 2006; SRO880 of 2007; SRO76 of 2008; SRO408 of 2012; SRO460 of 2013; SRO657 of 2013; SRO572 of 2014; SRO84 of 2015.
