Import of ''finished fabric'': FBR to charge five percent ST, one percent VAT

The Federal Board of Revenue (FBR) has decided to charge five percent sales tax with one percent value-added tax on the import of ''finished fabric'' by all types of importers including registered manufacturers of five zero rated sectors. In this connection, the FBR has issued instructions to the Model Customs Collectorates here on Friday.
According to the FBR''s instructions, the Model Customs Collectorate of Pakistan Customs Computerised System (PACCs) had sought a clarification regarding SRO 1125(I)/2011 of December 31, 2012. The FBR has examined the issue in the light of relevant provisions of the sales tax law and clarified that ''finished fabric'' is ready for use by the general public and hence is chargeable to sales tax at five percent and value addition tax at one percent at the import stage. It will apply on all types of importers including registered manufacturers of five zero rated sectors.
The FBR has further clarified that as per condition (iv) of the SRO 1125(I)/2011 all commercial importers, on import of goods useable as industrial inputs, shall be charged with sales tax at the rate of two percent along with one percent value addition tax at the import stage. It is further clarified that the item ''finished fabric'' is ready for use by the general public and hence, is chargeable to sales tax at the rate of five percent and value-addition tax at the rate of one percent at the import stage, FBR added.