The Federal Board of Revenue has proposed to restrict items of the SRO.1125(I)/2011 to those exclusively used in the five export-oriented sectors - textile, leather, surgical, carpets and sports - from next fiscal year (2013-14). Sources told Business Recorder Tuesday that the FBR has forwarded the budget proposal to the Ministry of Finance for consideration in the next budget.
The FBR is considering to curtail the list of items provided under notification 1125(I)2011 pertaining to five export oriented sector in upcoming financial budget. The FBR is reviewing the list of items given under reduced rate notification to exclude all such items which have considerable usage in other than five export-oriented sectors to reduced/curtail misuse of this facility. The existing list of reduced rate of sales tax consists of 128 items, including raw material and ingredients used in leather, textile, carpets, sports goods and surgical goods.
The items which are under strict review include master batches, maize corns, etc. The FBR is expected to exclude such items from the list of SRO.1125(I)/2011 as the same are not exclusively used in the five export-oriented sectors . The reduced rate scheme is recently been revised and revamped by the Board and sales tax @ 2 percent was imposed in lieu of zero-rating.
The scheme remained under frequent amendments and changes in last couple of years, particularly after 2009 when first time 5 percent sales tax on supplies to unregistered sales tax was introduced. The FBR is facing an uphill task to bridge revenue shortfall in this fiscal year and thus all the exemptions and zero ratings granted in the past are under strict review to generate maximum amount of revenue, sources added.
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