ISLAMABAD: There is an immense pressure on the Federal Board of Revenue (FBR) to restore sales tax exemption on sewing machines and imported bicycles.
Sources told Business Recorder here on Thursday that the Ministry of Industries and Production has pleaded a genuine demand of the local industries to restore sales tax exemption on bicycles, sewing machines, and similar kind of items now subjected to the standard rate of sales tax.
According to the sources, the FBR has been approached for protection of the domestic industries and sectors through the restoration of the sale tax exemption on the import of sewing machines and imported bicycles.
Under the Finance (Supplementary) Act, 2022, a number of exemptions from Table-1 of the Sixth Schedule to the Sales Tax Act, 1990 have been withdrawn.
The goods on which the GST at standard rate has been imposed can be broadly categorised as imported/ branded food items or plant and machinery and industrial inputs.
Imported live animals/ poultry, imported meat/ uncooked poultry, imported eggs, imported seeds and various types of agriculture equipment, plant and machinery of green field industries are some of the items, which are now brought into the standard regime.
Through new insertion in Table-2 of the Sixth Schedule, local supply of food items such as cereals, meat, poultry, vegetable, fruits, eggs, etc, has been exempted from the levy of sales tax. Similarly, supplies of locally-manufactured laptops and newspapers are also exempted.
Exemption on local supply of sugarcane has also been provided. On the other hand, some of the existing exemptions available in Table-2 have been withdrawn on raw cotton, whey and sausages (sold other than retail packaging), match-boxes among others.
Exemption to various plants, machinery and equipment, often involving huge tax expenditure, are available under Table-3 of the Sixth Schedule.
The FBR stated that the Eight Schedule to the Sales Tax Act, 1990, provides rates lower than standard rate of the GST and before the Finance (Supplementary) Act, 2022, a wide array of rates ranging from one percent to 16.9 percent were available under the said Schedule.
The differential rates were difficult to administer and open to misuse. Eighth Schedule has now been streamlined and a number of reduced rates and concessionary regimes have been withdrawn bringing these goods under standard regime.
Copyright Business Recorder, 2022
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