ST liabilities: amnesty scheme for textile sector shortly

The Federal Board of Revenue has decided to offer an amnesty scheme to the textile sector for payment of past sales tax liabilities skipped through the misuse of SRO.1125(I)/2011, by paying 2 percent sales tax without surcharge and penalty. Sources told Business Recorder here on Saturday that FBR has finalised the sales tax amnesty scheme for textile sector.
The time-bound amnesty scheme would be announced through issuance of a new notification following approval by the Ministry of Finance. The scheme has been drafted by the FBR on the request of the All Pakistan Textile Mills Association (Aptma). During consultations, the input of Aptma has been duly considered by the FBR.
Under the proposed scheme, the FBR will not charge default surcharge and penalty on payment of 2 percent sales tax which was avoided by the textile sector in earlier transactions. The sales tax avoided under zero-rating SROs would be applicable on supplies made from April 1, 2011 to February 28, 2013, official said. According to sources, the FBR has detected massive misuse of the zero-rating regime by the textile sector and FIRs have been registered against the tax evaders. In most of the cases, supplies have been made to the un-registered or blacklisted companies to avoid payment of 5 percent sales tax on supplies. Textile units have massively misused SRO.283 (I)/2011, SRO.1125 (I)/2011 and SRO.1012 (I)/2011.
Sources said that the implementation of the scheme would ensure deposit of sales tax without going into litigation. Through this time-bound amnesty scheme, in the absence of litigation billions of rupees would be deposited to the national exchequer. Recently, the FBR has imposed 2 percent sales tax on five export-oriented sectors that is textile, leather, surgical, carpets and sports from March 1, 2013. Zero-rating scheme of the five export oriented sectors has been modified to withdraw zero-rate of sales tax and instead introduce 2 percent sales tax on supplies to the five sectors (except utilities). The rate of sales tax for outside the five sectors has been kept intact at 5 percent.