The Federal Board of Revenue has proposed 16 percent standard rate of sales tax on sugar in Budget (2013-14). Sources told Business Recorder on Saturday that the FBR has moved the proposal to the Ministry of Finance for consideration in coming budget. The FBR has estimated collection of Rs 10 billion through this major budgetary measure in case the proposal was accepted by the policymakers.
The Board has proposed revision of Federal Excise Duty (FED) rate on sugar. The commodity is currently exempt from sales tax and charged to FED at the rate of 8 percent as compared to all major commodities/products which are chargeable to standard rate of 16 percent sales tax. This preferential treatment to sugar industry resulted in huge revenue loss to the government exchequer.
The FBR has proposed that instead of FED, sales tax at standard rate of 16 percent (or 17 percent as being proposed separately) may be levied, sources added. The government had given tax incentives on the export of sugar by drastically reducing Federal Excise Duty (FED) from 8 percent to 0.5 percent on local sale of sugar equivalent to quantity actually exported by the Sugar mills as per assigned export quota.
In order to boost export revenues, the FBR had incentivised export of sugar by providing a reduced rate of FED leviable on local supply of sugar @ 0.5 percent instead of 8 percent rate leviable on production and supply of sugar. The reduced rate of duty shall only be applicable on the quantity of local sale of sugar equivalent to the quantity actually exported by the sugar manufacturers in accordance with the export quota allotted and shall be available on submission of export proof. The balance local supply shall continue to be subject to Federal Excise Duty @ 8 percent.
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