The Federal Board of Revenue (FBR) has imposed federal excise duty (FED) on locally manufactured cars and SUVs, etc, of engine capacity exceeding 1700cc and above. According to the FBR''s budget instructions issued to the field formations here on Wednesday, the S. No. 55 of Table-1 of the First Schedule to the FED Act 2005 has been amended and duty of the imported motor vehicles of 1800 cc to 3000cc has been enhanced to 25 percent ad val. Further, a new S. No. 55A has been inserted whereby rate of federal excise duty has been enhanced to 30% ad valorem on import of motor cars, SUVs and other motor vehicles of cylinder capacity of 3000cc or above (other than those vehicles as designed for the transport of 10 or more persons).
The FBR said that the budgetary measures relating to sales tax and federal excise duty have been notified through Finance Supplementary (Second Amendment) Act, 2019. A brief summary of the measures has been drafted by the FBR for ease of understanding and necessary action by the field formations. At the same time, field formations are requested to consult the provisions of Finance Supplementary (Second Amendment) Act, 2019 for proper appraisal of the measures introduced.
Summary of the measures under these tax laws i.e. Sales Tax Act, 1990 and Federal Excise Act, 2005 is given hereunder:
To liquidate huge amounts claimed by taxpayers in refunds which have been accumulated over a long time, the government has decided to pay the same through sales tax refund bonds, which shall have a maturity period of three years. Simple profit at 10% per annum is also proposed to be paid. The claimants shall also be able to raise the much needed cash by selling these notes in the security market. A new Section 67A has been inserted in the sales Tax Act 1990 to include enabling provisions for payment of refund in this manner and also to provide for regulatory mechanism relating to issuance, transfer, redemption and other related matters, FBR said.
In Serial No. 110 in Table 1 to the Sixth Schedule of STA 1990, already available exemption of sales tax in relation to plant, machinery and equipment required for power generation from renewable sources of energy has been guaranteed up to 30th June, 2023, to provide for certainty and confidence to investors. Same protection has been ensured on the import side of the similar equipment as covered under S. No. 7 and S. No. 14A in Table 3 of the Sixth Schedule.
The FBR said that keeping in view the difficulties being faced by cancer patients and also on the orders of the Supreme Court, items relating to ostomy procedures for treatment of cancer patients, which were not expressly and exhaustively mentioned in the Sixth Schedule to the Sales Tax Act, 1990, have now been so covered by substituting Sr. No. 117 and relating it to heading 99.25 in the First Schedule to the Customs Act.
Presently, sales tax exemption on plant and machinery is available only to specified sectors. Other sectors have to pay sales tax on import of plant and machinery. This sales tax is adjustable against future output tax but such adjustment takes place after a long time when the industry starts selling its product.
This serves as an impediment to investment by increasing initial costs. In order to encourage green field investment and industrialisation, exemption from payment of sales tax on imported plant and machinery to be used for setting up new industry for production of taxable goods has been provided by amending Sixth Schedule to the Sales Tax Act, 1990, as imported by the persons registered on or after 1st July, 2019, through Sr. No. 150 in Table-1 of the Sixth Schedule to the STA 1990. The FBR has further informed the field formations that the new rates on the import of cellular mobile phones have been introduced by substitution in the Ninth Schedule to the Sales Tax Act (STA) 1990.
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