Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has said that FBR is working on special measures for recovery of sales tax from sugar mills during 2019-20. According to a tweet of Shabbar Zaidi on Wednesday, "The FBR is working on special measures for appropriate recovery of sales tax from sugar mills in the season expected to start in the following month." When contacted, FBR Chairman Shabbar Zaidi told Business Recorder that the FBR's measures would focus on checking production of sugar at the production stage through appointment of special teams, "We will endeavour to appoint teams, gradually independent including official to verify production at production time. The Board is still in the process of considering various options in this regard", Shabbar Zaidi added.
During budget finalization exercise for 2019-20, the FBR chairman had informed the Senate Standing Committee on Finance that out of 84 mills, 71 mills have declared losses, which is not understandable. Over 40 percent of the sales of sugar are done through dealers and remaining 60 percent sugar is directly sold. The ex-factory price of sugar has been shown at Rs 30 per kg.
The argument of the sugar mills that most of them are in losses is not acceptable to the FBR, Shabbar Zaidi added. In budget (2019-20), the government had taken two decisions relating to the sugar. Firstly, in order to generate much need revenue, sales tax rate on sugar was enhanced from 8 percent to 17 percent. In this regard, Serial number 32 relating to 8% rate on "white crystalline sugar" was omitted.
White crystalline sugar is now chargeable to sales tax @ 17% ad val. Secondly, SRO 692(I)/2019 dated 29.06.2019 amends SRO 648(I)/2013 which prescribes exclusions from chargeability of further tax. Two new serial numbers 12 and 13 have been added which provide exclusion from further tax to supplies to the Government, semi government and statutory regulatory bodies and supplies of white crystalline sugar. The further tax under Section 3(1 A) of the Sales Tax Act, 1990, shall not be charged in the aforesaid two cases.
Prior to the Finance Act, 2019, manufacturers, distributors, dealers, wholesalers or commercial importers of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sectors were not required to give the name, CNIC, NTN and addresses of persons i.e., retailers in the withholding statement filed under section 165 due to clause (81) of Part IV of the Second Schedule. However, the said clause (81) has been omitted through the Finance Act, 2019 and now the particulars mentioned above are required to be completely furnished in the withholding statement as the failure to furnish the same or furnishing incomplete or inaccurate particulars is an offence under clause (ca) of sub-section (1) of section 191.
In the past, Chairman Federal Board of Revenue (FBR) Shabbar Zaidi had said after introduction of the Finance Act 2019, the sugar industry itself came to the FBR for discussing the taxation and documentation issues of the sector. The sugar dealers sought waiver from the registration, which had been rejected by the FBR, he said.
Shabbar Zaidi had said that FBR has accepted the demand of the sugar dealers to reduce the said taxes on dealers. This was subject to the condition that the dealers get themselves registered with the FBR.
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