CBR explains rate of sales tax on machinery import

The Central Board of Revenue (CBR) has directed custom authorities at ports/dryports not to charge sales tax on the import of all types of machinery and equipment covered under all the concessionary customs notifications.
Sources told Business Recorder here on Wednesday that CBR had a few days back issued a list of 300 types of machinery/equipment liable to sales tax at the rate of zero-percent under SRO 500(I)/2004 of June 12, 2004.
The sales tax authorities had dispatched items classified under Chapter 84, Chapter 85 and Chapter 90 of the Pakistan Customs Tariff 2004-2005 to collectors of customs.
The collectorates of customs including Appraisement Karachi were unclear about the applicability of zero-rate of sales tax on machinery/equipment specified in the list (Pakistan Customs Tariff Headings).
They questioned about the status of SRO.500 in case of items not covered under the list of PCT headings supplied by the CBR.
The CBR on Wednesday issued a new clarification to collectors of customs to settle the issue.
The CBR has directed regional collectors that the list of tariff headings as mentioned in Annex-A of CBR's clarification issued on July 29, 2004 was merely an indicative list of tariff headings attracting customs duty at the rate of 5 percent and allowed zero-rating of sales tax under SRO.500.
However, it is clarified that zero-rating is also available on such plant, machinery and equipment imported under a concessionary notification issued in terms of section 19 of the Customs Act, 1969.
Since, it was not possible to mention all such possible tariff headings, which can be imported (under a concessionary notification) and to avoid any confusion, the indicative list (Annex-A) of the previous clarification only contained tariff headings of plant, machinery and equipment chargeable to customs duty @ 5 percent.
Accordingly, it is once again clarified that all such plant, machinery and equipment imported under a concessionary notification will also attract zero-rating of sales tax, subject to the conditions mentioned in Column-4 of SRO 500(I)/2004 dated 12.6.2004.