Fertilizers: FBR acts to stop reduction in taxable value of supplies

The Federal Board of Revenue (FBR) has barred the manufacturer or importer making supplies of fertilizers from reducing taxable value or price of the commodity for assessment of sales tax or bringing down sales tax amount on account of subsidy. Through S.R.O. 1198(1)/2015 issued here on Thursday, the FBR has issued Special Procedure for Adjustment of Sales Tax due on Fertilizers Rules, 2015.
The FBR has also decided to establish a Fertiliser Cell at the FBR for processing of claims of manufacturers and importers of the fertilizers for adjustment of subsidy against sales tax. The manufacturers and importers of the fertilizers would be entitled to adjustment of sales tax, but not permitted to reduce taxable value or price of the commodity, sources said.
The FBR rules stated that the subsidy as determined under the Ministry of National Food Security and Research's Notification No F.1-11/2012/DFSC-II/Fertilizer, dated the 20th November, 2015, and as credited into sales tax head, shall be allowed to be adjusted by the manufacturers and importers of the fertilizers specified in the said Notification, hereinafter referred to as the specified fertilizers, in the manner as provided under these rules.
The manufacturer or importer making supplies of the specified fertilizers shall not reduce taxable value or price for the purpose of assessment of sales tax or the sales tax amount on account of subsidy, FBR said. For processing of claims for adjustment, the Fertiliser Cell established by the Federal Board of Revenue shall process adjustment claims under these rules.
The manufacturers and importers of specified fertilizers shall provide invoice- wise details of the subsidised fertiliser sold, specifying name of buyer, NTN/CNIC, description, quantity of goods sold and other relevant information on advance manual copy of the sales tax return, FBR said. The FBR stated that the manufacturers or importers of the specified fertilizers shall submit details of the specified fertilizers supplied during the tax period in the format provided in Annex-A to these rules along with necessary reconciliation to the Fertiliser Cell along with copies of sales tax invoices in respect of the specified fertilizers.
The Fertiliser Cell shall provide a dated acknowledgement of the adjustment claim. The reconciliation and examination of the adjustment claim with the monthly return shall be completed by the Fertiliser Cell within seven working days of submission of Annex-A. The Fertiliser Cell shall determine the amount to be adjusted against sales tax due and also the balance amount payable by the State Bank of Pakistan with the assistance of the representatives of Ministry of National Food Security and Research and National Fertiliser Development Centre, Islamabad and forward its report 'on Annex-A to the Ministry of National Food Security and Research, Islamabad.
Based on the aforesaid report, adjustment of the amount as recommended shall be claimed by the manufacturer or importer, as the case may be, in the monthly sales tax and federal excise return, FBR said. The details of the subsidized fertiliser supplied by the manufacturers or commercial importers include name of the registered person; NTN of the registered person, summary of subsidized fertilizers supplied, bagged DAP supplied and subsidy claimed; Bagged Nitrophos supplied and subsidy claimed; Bagged NPK Fertiliser supplied and subsidy claimed; Bagged SSP fertiliser; any other relevant details.