Five zero-rated sectors: revamped SRO defines rates of taxes on finished goods

The totally revamped S.R.O.1125(I)/2011 for leading export sectors including textile revealed that the import of finished goods ready for use by the general public, shall be charged to tax at the rate of five per cent and value addition tax at the rate of one per cent.
Sources told Business Recorder here on Friday that the stakeholders have submitted draft of the revised S.R.O.1125(I)/2011 to the Federal Board of Revenue (FBR) for consideration. The draft has been submitted by the private sector to the FBR for finalisation of the revised S.R.O.1125(I)/2011. According to the draft S.R.O.1125(I)/2011 prepared by private sector and submitted to the FBR , the benefit of this notification shall be available to every such person doing business in textile (including jute), carpets, leather, sports and surgical goods sectors, who is registered as manufacturer; importer; exporter; and wholesaler; processing sizzing, warping and weaving.
The conditions of the SRO revealed that on import by registered manufacturers of five zero-rated sectors mentioned in condition and commercial importers, sales tax shall be charged at the rate of zero per cent on goods useable as industrial inputs. The goods imported by, or supplies made to manufacturers, other than manufacturers mentioned in condition, shall be charged, sales tax at the rate of one per cent.
The commercial importers, subsequent liabilities arising against supply of these goods to the zero-rated sector at the rate of zero per cent or to non zero-rated sectors or unregistered persons at the rate of one per cent as the case may be. The balance amount shall be paid with the monthly sales tax return or in case of excess payment shall be carried forward to the next tax period, it said.
The import of finished goods ready for use by the general public, shall be charged to tax at the rate of five per cent and value addition tax at the rate of one per cent. The supplies of finished products of the sectors specified in condition shall, if sold to the retailers (both registered and unregistered) or end consumers shall be charged to sales tax at the rate of five per cent ad val.
The supplies of goods, usable as industrial inputs, to registered persons of five zero-rated sectors up to wholesale stage shall be charged to tax at the rate of zero per cent.
The registered persons who are solely or otherwise engaged in the retail business of these goods or products shall pay sales tax at the rate of five per cent ad val on their retail sales and shall be entitled to input tax adjustment. They shall not be required to pay any other sales tax leviable on their such retail transactions, however, such retailers shall be liable to pay turnover tax as prescribed under Chapter III of the Sales Tax Special Procedure Rules, 2007, and the goods supplied at the rate of five per cent shall not constitute part of turnover on which the aforesaid turnover tax is to be paid, draft SRO said.
The registered manufacturers who process goods owned by unregistered persons shall charge sales tax at the rate of five per cent on the processing charges received by them, provided that no such tax shall be charged from the registered principals. A registered person who has consumed any other inputs acquired on payment of sales tax, whether covered under this notification or not, shall be entitled to input tax adjustment or, as the case may be, refund in respect of the supplies made by him either at the rate of zero per cent or five per cent or sixteen per cent ad val as the case may be, it said.
The registered manufacturers shall be entitled to adjustment of input tax paid on machinery, parts, spares and lubricants acquired by them for their own use. The supply of electricity and gas to the registered manufacturers or exporters of five zero-rated sectors mentioned in condition (i), shall be charged sales tax at the rate of zero per cent in the manner specified by the Board.
The benefit of this notification shall be available to such registered persons who appear on active taxpayers list (ATL) on the website of Federal Board of Revenue; and this notification shall apply from ginning onwards in case of textile sector; production of PTA or MEG for synthetic sector; regular manufacturing in case of carpets and jute products; tannery in case of leather sector; and organised manufacturing in case of surgical and sports goods, draft SRO said.
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, and in supersession of its Notification No S.R.O. 1058(I)/2011, dated the 23 November, 2011, the Federal Government is pleased to notify the goods specified under the PCT heading numbers mentioned including the goods or class of goods mentioned in the conditions stated in this notification, to be the goods on which sales tax shall, subject to the said conditions be charged at zero-rate or, as the case may be, at the rate of five per cent, wherever applicable, to the extent and in the manner as specified in the aforesaid conditions, namely:-
Leather and articles thereof including artificial leather Footwear (PCT Heading 41.01 to 41.15, 64.03); Textile and articles thereof excluding monofilament, sun shading, nylon fishing net, other fishing net, rope of polyethylene and rope of nylon, tyre cord fabric (Chapter 50 to Chapter 63 and other respective headings excluding 5407.2000, 5608.1100, 5608.1900, 5608.9000); Carpets (57.01 to 57.05); Maize (corn) starch (1108.1200); Mucilages and thickness, whether or not modified, derived from locust beans locust bean seeds or guar seeds (1302.3210, 1302.3290, 1302.3900); Sports goods (9504.2000, 9506 and other respective headings); surgical goods (respective headings); emery powder/grains (2513.2010); magnesium oxide (2519.9010); coning oil (2710.1991); spin finish oil (2710.1998); antimony oxide (2825.8000); sodium bromate (2829.9000); Sodium sulphide and sodium hydrogen sulphide (2830.1010,2830.1090); Sodium dithionite (2831.1010); Sodium sulphite and sodium hydrosulphide (2832.1010, 2832.1090); Phosphinates (hypophosphites) and phosphonates (phosphates) (2835.1000); Sodium dichromate (2841.3000); Hydrogen per oxide (2847.0000); p-Xylene (2902.4300); Trichloroethylene (2903.2200); Ethylene Glycol (MEG) (2905.3100); Di-ethylene glycol (2909.4100); Ethyl glycol (2909.4490); Tri-ethylene Glycol (2909.4990); Glutar aldehyde (2912.1900); Formic acid (2915.1100); Sodium formate (2915.1210); Acetic acid (2915.2100); Sodium acetate (2915.2930); Acrylic acid and its salts (2916.1100); Esters of Methacrylic acid (2916.1400); Oxalic acid (2917.1110); Pure terephthalic acid (PTA) (2917.3610); Glycolic acid and their esters (2918.1800); Other phosphoric esters and their salts (2919.9090); Dyes intermediates (2921.0000, 2922.0000, 2923.0000, 2924.0000, 2927.0000, 2933.0000, 2934.0000); DMF (Dimethyl Formamide) (2924.1990); Acrylonitrile (2926.1000); Other organic derivatives of hydrazine or of hydroxylamine (2928.0090); Tanning extracts of vegetable origin; tannins and their salts, ethers, esters and other derivatives (3201.1000, 3201.2000, 3201.9020, 3201.9090); Synthetic organic tanning substances, inorganic tanning substances, tanning perpetrations, whether or not containing natural tanning substances; enzymatic preparations for pre- tanning (3202.1000, 3202.9010, 3202.9090); Disperse dyes and preparations based thereon (3204.1100); Acid dyes and preparations based thereon (3204.1200); Basic dyes and preparations based thereon (3204.1300); Direct dyes and preparations based thereon (3204.1400); Indigo Blue (3204.1510); Vat dyes and preparations based thereon (3204.1590); Reactive dyes and preparations based thereon (3204.1600); Pigments and preparations based thereon (3204.1700); Dyes, sulphur (3204.1910); Dyes, synthetic (3204.1990); Synthetic organic products of a kind used as fluorescent brightening agents.(3204.2000); Other synthetic organic colouring matter (3204.9000); Pigments and preparations based on titanium dioxide (3206.1900); Other colouring matter and other preparations (3206.4900); Granules, flakes, powder of glass (others) (3207.4090); Prepared water pigments of a kind used for finishing Leather (3210.0020); Cationic surface active agents (3402.1210, 3402.1220, 3402.1290); Non-ionic surface active agents (3402.1300); Surface active preparations and cleaning preparations excluding detergents (3402.9000); Preparations for the treatment of textile material, leather, fur skins or other material (3403.1110, 3403.1120, 3403.1990, 3403.9110, 3403.9190); Spin finish oil (3403.9131); Artificial waxes and prepared waxes (3404.9010); Other artificial waxes (3404.9090); Electro polishing chemicals (3824.9060); Other glues (printing gum) (3505.2090); Shoe adhesives (3506.9110); Hot melt adhesive (3506.9110, 3506.9190); Enzymes (3507.9000); Photographic film, with silver halide emulsion (for textile use) (3702.4300, 3702.4400); Sensitizing emulsions (for textile use) (3707.1000); Fungicides for leather industry (3808.9220); Preparation of a kind used in textile or like industry (3809.9110, 3809.9190); Preparation of a kind used in leather or like industries (3809.9300); Compound plasticizers for rubber or plastics (3812.2000); Antimony triacetate (3815.1910); Palladium catalyst (3815.9000); Electrolyte salt (3824.9060); Polymers of vinyl acetate (in aqueous dispersion) (3905.1200); Vinyl acetate copolymers: in aqueous dispersion (3905.2100); Polymers of vinyl alcohol (3905.3000); Other vinyl polymers (3905.9990); Other acrylic polymers (3906.9030); Acrylic polymers in primary forms (3906.9090); Polyethylene terephthalate-Yarn grade, and its waste (3907.6010); Nylon Chips (PA6) (3908.1000); Polyurethanes (3909.5000); Silicones in primary form (3910.0000); Cellulose nitrates nonplasticised (3912.2010); Other cellulose nitrates (3912.2090); Carboxymethyl cellulose and its salts (3912.3100); Alginic acids, its salts and esters (3913.1000); Nylon tubes (3917.3910); Artificial leather (3921.1300); Synthetic leather grip (3926.9099); Natural rubber latex (4001.1000); Technical specialized natural rubber (4001.2200); Rubber latex (4002.1100); Synthetic rubber SBR 1502 latex (4002.1900); Butadiene rubber (4002.2000); Thermo-plastic rubber (T.P.R.) (4002.9900); Vulcanised rubber thread and cord (4007.0010, 4007.0090); Leather shearing-finish leather with wool (4302.1910); Articles of apparel and clothing accessories of fur skin (4303.9000); Artificial fur and articles thereof (4304.0000); English willow cleft (wood) (4404.1000); Cork Granules (4501.9000); Cork sheet (4504.1010); Satin Finishing Wheels (6804.2100); Carbon Fiber (6815.1000); Glass fiber sleeves (7019.9010); Forging of surgical and dental instruments (7326.1920); Nickel rotary printing screens (7508.9010); Hooks for footwear (8308.1010); Eyes and eyelets for footwear
(8308.1020); Tubular or bifurcated rivets (8308.2000); Strings (8308.9090); Bladders and covers of inflatable balls (9506.9919); Press-fasteners, snap fasteners and press studs (9606.1000); Buttons of plastics not covered with textile material (9606.2100);
Buttons of base metal not covered with textile materials (9606.2200); Studs (9606.2910); Buttons (9606.2920); Slide fasteners (9607.1100, 9607.1900); Wood-pulp (dissolving grade) (4702.0000 if imported by manufacturers of viscose staple fibre for use in the manufacturing of viscose staple fibre); Cotton linter (1404.2000); Sequins (3926.9099), list of zero-rated items added.