The Federal Board of Revenue (CBR) has directed the registered manufacturers of biscuits, confectionery and snacks to pay additional sales tax on 12 percent value-addition in lieu of sales tax payable on the basis of printed retail price.
In this connection, the FBR on Saturday issued new rules for the manufacturers of biscuits, confectionery and snacks to be applicable from July 1, 2007. The provisions of new rules will apply to manufacturers of biscuits, confectionery and snacks who are required to pay sales tax on printed retail price under Third Schedule of the Sales Tax Act, 1990.
Under the procedure, all the registered manufacturers of biscuits, confectionery and snacks shall, in addition to the 15 percent sales tax payable of the value at which the goods are cleared or supplied from the factory (ex-factory price), pay sales tax on a value addition of 12 per cent in lieu of sales tax payable on the basis of printed retail price.
The Board has clarified that the expression 'snacks' includes potato chips and sticks falling in PCT heading No 20.05 and cheese balls falling in PCT heading No 19.04. While determining his tax liability, a manufacturer shall be entitled to claim input tax credit for the tax paid on account of taxable purchases or imports made by him and utilities like gas or electricity consumed for furtherance of taxable activity, against his output tax liability, subject to the laid down conditions, limitations, and restrictions.
The retail price, inclusive of sales tax, shall be legibly, prominently and indelibly printed or embossed by a manufacturer on each article, packet, container, package, cover or label, as the case may be.
The manufacturer, who for any reason cannot have the retail price printed, shall declare to the Collector of Sales Tax having jurisdiction the retail price, at which the item would be sold to the general body of consumers, along with the reasons or justification for not printing the retail price.
The distributors and wholesalers shall be exempted from payment of sales tax on biscuits, confectionary and chips on which the manufacturer has charged sales tax in the prescribed manner.
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