Tax-exempt areas of Fata/Pata: 16pc GST levied on goods supplied to taxable areas

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed 16 percent sales tax on goods supplied from tax-exempt areas of erstwhile Federally Administrated Tribal Areas (Fata) and the Provincially Administered Tribal Areas (Pata) to the taxable areas.

The clause has been included in the Sales Tax Act, 1990, through the amended Finance Bill 2021 issued here on Tuesday. In case of online market place, two percent sales tax would be applicable on persons other than active taxpayers.

The two percent sales tax would be gross value of supplies. Provided that the provision would be effective from the date as notified by the board. Through amendments in the Finance Bill 2021, the increase in tax on milk and dairy products from 10 to 17 percent has been withdrawn, 17 percent tax on gold and silver is being reduced to one percent and three percent, respectively, whereas, on its value addition, the tax would remain 17 percent.

The reduced rate of sales tax on poultry and cattle feed has been restored to 10 percent and no tax on flour and flour products. The amended Finance Bill 2021 has revised the tax on capital gains on disposal of immovable properties.

Where the gain does not exceed Rs5 million, the rate of tax would be 3.5 percent; where the gain exceeds Rs5 million but does not exceed Rs10 million, the rate of tax would be 7.5 percent; where the gain exceeds Rs10 million but does not exceed Rs15 million, tax rate would be 10 percent and where the gain exceeds Rs15 million, the rate of tax would be 15 percent.

Under the new provision of "minimum production of steel products" the minimum production of steel products shall be determined as per specified criteria. The production criteria would be one metric ton per 700kwh of electricity consumed for production of steel billets and ingots.

The production criterion has been set at one metric ton per 110kwh of electricity consumed for production of steel bars and other re-rolled long profiles of steel and the production criteria would be 85 percent of the weight of the vessel imported for breaking for production of ship plates and other re-rollable scrap.

The FBR will charge 3-4 percent customs duty on the import of parts for hybrid vehicles under the Auto Industry Development Export Policy (AIDEP). The concession shall be admissible to manufacturers of hybrid electric vehicles subject to certification and quota determination by the Engineering Development Board (EDB).

The FBR has relaxed penalty for contravening requirement of placement of invoice/packing list inside the import container to Rs50,000 for first time, and Rs250,000 for second time. Where a conveyance found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under clause(s) of Section 2 of the Customs Act, has been seized for the third time, no option to pay fine in lieu of the confiscation shall be given.

Copyright Business Recorder, 2021