The Federal Board of Revenue (FBR) has imposed standard rate of 17 percent sales tax on 57 items of zero-rating sectors, having multiple use in different local industries. The Board has withdrawn zero-rating facility on these items through SRO 323(I)/2011, which have multiple use in different industries.
According to details, the federal government had earlier issued SRO 283(I)/2011 as amended by SRO 314(I)/2011, whereunder the facility of zero-rating granted on the inputs and outputs of five major export sectors ie textile, carpets, leather, surgical and sports goods vide SRO 509(I)/2007 dated 09.6.2007 was continued with inclusion of 43 new items.
However, several local manufacturers of items, covered under the zero-rating scheme, pointed out the disadvantages faced by them because of outright extension in zero-rate facility or reduced rates of sales tax on their end products especially when they are not entitled for input tax adjustment on their reduced rate supplies. Moreover, several industry experts identified a number of items which were either not useable by the five concessionaire export sectors or their principal use was in sectors other than the five concessionaire sectors or they have multiple uses with the likelihood of undue overselling of zero-rating or reduced rate facility.
Considering all the above facts, the federal government has issued a new notification, SRO 323(I)/2011 dated 27.4.2011, whereby 57 items have been deleted from SRO 283(I)/2011, including the 43 new items earlier included over and above the items covered under SRO 509(I)/2007. The exporters (both industrial and commercial) will, however, get refund of input tax on their exports on reduced time scale of one week under the Expeditious Refund System, the FBR added.
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