The Federal Board of Revenue has removed ambiguities in collection of sales tax from five leading export-oriented sectors through amendments to SRO.1125(1)/2011, facilitating business and trade at import as well as local manufacturing stages. Sources told Business Recorder here on Sunday that the representatives of business and trade highly appreciated the FBR's recently issued SRO which amended SRO.1125(1)/ 2011 to apply 5 per cent lower rate of sales tax on local supply of finished leather and textile made-ups.
The appreciations of those export units which earlier contested the SRO.1125(1)/2011 gives a clear message to the FBR that accurate changes have been made in the revised sales tax regime for major export-oriented sectors.
Commenting on the new FBR's notification, Abrar Ahmed Chief Executive Officer of Shafi Reso Chemical, a leading exporter, was of the view that the FBR has removed anomalies in the relevant notification through necessary changes in the SRO.1125(1)/2011. The export group is well aware of the developments and repeatedly highlighted the issues in the SRO.1125(1)/2011 to the FBR time and again. On behalf of Lahore-based exporters, Shafi Reso Chemcial was also one of the companies which was actively engaged in interaction with the FBR through representations for resolving sales tax related issues under SRO.1125(1)/2011.
After issuance of SRO dated June 26, 2013, major anomalies have been removed from SRO.1125(1)/2011 by allowing import or supply to the registered manufacturers, whether or not of the five sectors, for manufacture of goods specified in Table -1 or Table -II of the amended SRO 1125, at the rate of 2 percent sales tax on their import or supply. It is a wise step towards the betterment of the industry, Abrar said.
Abrar Ahmed informed that the FBR has resolved the outstanding sales tax issues of exporters by understating the practical problems through proper interpretation of tax law and its implementation.
The industry was facing serious problems in running their businesses due to legal status and application of sales tax prior to issuance of amendments in the SRO.1125(1)/2011. In the next stage, the FBR should make necessary arrangements to allow the manufactures to claim the refund on the excess of input over the output in case of local supply which has considerably increased during the period of March-June 2013. The manufactures cash flow has been stuck up in the sales tax refund and if it is allowed to be adjusted under normal process, it would take 2-3 years to adjust the excess amount of input tax against output tax. The FBR's one-time permission to allow the manufactures to claim the said refund would increase cash follow to the business units and capacity to run the businesses on day to day basis, CEO of Shafi Reso Chemical.
It is important to mention that the FBR has given an equal treatment of sales tax rate has been given to commercial importers and manufactures at the import stage. The commercial importers and manufacturers would now be subjected to a uniform rate of 5 percent sales tax at the import stage.
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