THURSDAY MARCH 21: Five export sectors allowed input tax adjustment: FBR issues new SRO

ISLAMABAD: The Federal Board of Revenue (FBR) has announced that persons registered in five leading export sectors, who have consumed inputs acquired on payment of sales tax, would be entitled to input tax adjustment. In this regard, the FBR has made amendment in the SRO1125(I)/2011 through an SRO221(I)/2013 issued here on Wednesday.
Sources said that the FBR has made amendments in the present scheme of sales tax for five export oriented sectors to resolve issues highlighted by concerned associations. The issues have been duly addressed and an SRO has been issued by the Board. The FBR has rationalised the zero-rating regime under SRO1125(I)/2011which was earlier modified vide SRO154(I)/2013.
According to the SRO221(I)/2013, the registered manufacturers who process goods, including fabrics, owned by other persons shall charge sales tax at the rate of two per cent of the processing charges received by them. Moreover, the registered person who has consumed inputs acquired on payment of sales tax, shall be entitled to input tax adjustment, subject to the relevant provisions of the Sales Tax Act, 1990 and Rules made thereunder. Provided that in case of local supplies no refund shall be admissible. However, exporters shall be entitled to get refund in accordance with the law, it added.
Following is the text of the notification issued here on Wednesday: "SRO221(I)/2013.- In exercise of the powers conferred by clause (c) of section 4 read with clause (b) of sub-section (2) and sub-section (6) of section 3, clause (b) of sub-section (1) of section 8 and section 71 of the Sales Tax Act, 1990, the Federal Government is pleased to direct that the following further amendments shall be made in its Notification No S.R.O. 1125(I)/2011 dated the 31st December, 2011, namely:-
In the aforesaid Notification:
(a) in clause (vi), after the word "registered" the words "or unregistered" shall be inserted;
(b) in clause (vii), the word "registered" shall be omitted;
(c) clause (ix) and Explanation shall be substituted, namely:-
"(ix) registered manufacturers who process goods, including fabrics, owned by other persons shall charge sales tax at the rate of two per cent of the processing charges received by them"; and
(d) clause (x) shall be substituted, namely:-
"(x) a registered person who has consumed inputs acquired on payment of sales tax, shall be entitled to input tax adjustment, subject to the relevant provisions of the Sales Tax Act, 1990 and Rules made thereunder.
Provided that in case of local supplies no refund shall be admissible. However, exporters shall be entitled to get refund in accordance with the law."