Proposed Tax Laws (Fourth) Amendment Bill: FBR seeks to slap 17pc ST on various items

ISLAMABAD: The Federal Board of Revenue (FBR) has proposed to impose sales tax worth Rs350 billion on a wide range of items including 17 percent sales tax on the import of LPG, mobile phones, computers, plant, machinery/equipment, and a lower rate of sales tax on the import of raw materials used in the manufacturing of medicines under the Tax Laws (Fourth) Amendment Bill, 2021.

Sources told Business Recorder here on Saturday that the 17 percent sales tax has been proposed to be imposed on a number of goods at the import stage and domestic supplies. The withdrawal of the sales tax exemptions of Rs350 billion would result in the imposition of the sales tax on a number of exempted goods at the import stage, as well as, local supply.

The tax will have an inflationary impact, which will be passed immediately on to the consumers in the form of an increase of 17 percent in the prices of the items.

Under the draft of the Tax Laws (Fourth) Amendment Bill 2021, the 17 percent sales tax has been proposed to be levied on the import of plant, machinery and equipment, books, chemicals, solvent oil, household items under baggage scheme, animals, seeds, poultry, eggs, meat, vegetables/fruit, pulses, and other items.

The FBR will eliminate all sales tax zero-rated goods except on export and capital machinery goods and move them to the standard 17 percent sales tax rate.

The FBR has proposed to impose 17 percent sales tax on the items with dedicated use of renewable sources of energy such as solar and wind including solar PV panels; LVD induction lamps; SMD, LEDs, with or without ballast, with fittings and fixtures; wind turbines including alternators and mast; solar torches and lanterns, and related instruments.

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Under the draft of the Tax Laws (Fourth) Amendment Bill, 2021, the 17 percent sales tax has been proposed to be imposed on the LPG; import of re-meltable scrap; silver, in un-worked condition; gold, in un-worked condition and articles of jewellery, or parts thereof, of precious metal or of metal clad with precious metal; incinerators of disposal of waste management, motorized sweepers and snow plough; plant and machinery not manufactured locally and having no compatible local substitutes; ingredients of poultry feed, cattle feed; re-importation of foreign origin goods which were temporarily exported out of Pakistan; plant, machinery, and equipment used in the production of bio-diesel; second hand and worn clothing or footwear; agricultural tractors; tillage and seed bed preparation equipment and post-harvest handling and processing and miscellaneous machinery and some other items specified in the Eighth Schedule of the Sales Tax Act, 1990.

The standard rate of 17 percent sales tax has been proposed to be imposed on the import of plant, machinery and production line equipment used for the manufacturing of mobile phones by the local manufacturers of mobile phones; laptop computers, notebooks whether or not incorporating multimedia kit and personal computers; sunflower and canola hybrid seeds meant for sowing and combined harvesters up to five years old.

Sales tax has been proposed on the import of live animals and live poultry; meat of bovine animals, sheep and goat; fish and crustaceans; eggs including eggs for hatching; live plants including bulbs, roots and the like; edible vegetables including roots and tubers; pulses; edible fruits; red chillies excluding those sold in retail packing bearing brand names and trademarks; ginger excluding those sold in retail packing bearing brand names and trademarks; turmeric excluding those sold in retail packing bearing brand names and trademarks; cereals and products of the milling industry; seeds, fruit and spores of a kind used for sowing; Cinchona bark and sugar cane.

Sales tax has been proposed to be levied on the import of journals, periodicals and books; currency notes, bank notes, shares, stocks and bonds; goods (including dry fruits imported from Afghanistan) temporarily imported into Pakistan, meant for subsequent exportation charged to zero-rate of customs duty; import of ship stores; personal wearing apparel and bona fide baggage imported by overseas Pakistanis and tourists, if imported under various baggage rules and is exempt from Customs duties; goods and services purchased by non-resident entrepreneurs and in trade fairs and exhibitions subject to reciprocity and such conditions and restrictions as may be specified by the Board; uncooked poultry meat whether or not fresh, frozen or otherwise, preserved or packed; cotton seed; preparations suitable for infants, put up for retail sale; colours in sets(poster colours); writing, drawing and making inks; erasers; exercise books; pencil sharpeners; sewing machines of the household type; other drawing, marking out or mathematical calculating instruments (geometry box); pens, ball pens, markers and porous tipped pens; pencils including colour pencils.

Electric vehicles, kits: sales tax exemptions retained

Sales tax has been proposed to be imposed on the import and local supply of fish feed; fans for dairy farms; bovine semen; preparations for making animal feed; promotional and advertising material and oil cake and other solid residues, whether or not ground or in the form of pellets.

The government would also impose a 17 percent sales tax on the local supply of raw material and intermediary goods manufactured or produced, and services provided or rendered, by a registered person, consumed in-house for the manufacture of goods subject to sales tax.

Sales tax at the rate of 17 percent has been proposed on the local supply of fixed assets; single cylinder agriculture diesel engines (compression-ignition internal combustion piston engines); Sprinkler equipment; Drip equipment; Spray pumps and nozzles and match boxes may be subjected to

Sales tax has been proposed to be imposed on the goods and the raw materials, packing materials, sub-components, components, sub-assemblies and assemblies imported or purchased locally for the manufacture of preparations suitable for infants, put up for retail sale; bicycles; colours in sets; writing, drawing and marking inks; erasers; exercise books; pencil sharpeners; geometry boxes; pens, ball pens, markers and porous tipped pens; pencils including colour pencils; supply, repair or maintenance of any ship which is neither; (a) a ship of the gross tonnage of less than 15 LDT; nor (b) a ship designed or adapted for use for recreation or pleasure; supply of spare parts and equipment for ships and supply of equipment and machinery for salvage or towage and supply of equipment and machinery for other services provided for the handling of ships in a port.

Copyright Business Recorder, 2021