The Central Board of Revenue (CBR) has exempted from withholding tax the inputs, temporarily imported, for manufacture of export goods by manufacturers-cum-exporters under ''''''''Temporary Importation Scheme''''''''.
The exemption of withholding tax would be applicable on import of all those items which are also exempted from customs duty and sales tax under SRO 1065(I)/2005 of October 20, 2005. The Board issued SRO 863(I)/2006 here on Tuesday to facilitate leading value-added industries, engaged in temporary import of raw materials/inputs for subsequent exportation.
The exemption of withholding tax would be available on temporary import of materials, excluding fabrics and leather, for manufacturing of leather goods, garments and sports goods, garments and textile made-ups including foundation garments and furniture, woodware and fittings.
The WHT exemption would also be applicable on temporary import of textile designs, artwork, transparencies (bearing design for textiles) for reproduction of finished goods. Plush fabrics, nylon, polyester fibre, and eyes and nose for use in stuffed toys, Unit soles with heels, soles and heels for manufacture of footwear. Price labels or tags for affixing on finished goods have also been exempted from the levy.
The exemption of withholding tax has also been extended on temporary import of trimmings, buttons, belts, fur lining, lining, pads and inter-lining material, Velcro tapes, hangers, special labels, special buttons, rivets, eyelets, buckles, special brand tags, special thread and other items such as decorative fittings, zippers, locker loops, etc, for use in ready made garments, foundation garments, textile made ups, footwear and other items.
Other items included materials for embellishing or decorating goods produced in Pakistan for exportation and components and sub-components for assembly of machinery and parts thereof, electrical and electronic equipment and parts thereof; bicycles; aluminium-ware, steel ware, kitchen utensils and cutlery, vacuum flasks; surgical instruments and dolls, toys and games; forgings of surgical instruments for processing; packing material (excluding straw, paper, paper cones, glass wool and like material) for packing of goods; polypropylene woven and jute bags subject to the condition that such bags bear the particulars of the Pakistani exporters in permanent print on each bag.
The WHT exemption would also be applicable on temporary import of materials for general superficial processes such as elementary repairs, cleaning, removal of damaged parts, sorting, straining, sifting, filtering, marking, sealing, labelling, re-packing, drying, preserving, refrigerating, chilling, fumigating, greasing, anti-rusting, protective coating, printing, etc.
SRO 863(I)/2006: In exercise of the powers conferred by sub-section (2) of section 53 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to direct that the following further amendment shall be made in the Second Schedule to the said Ordinance, namely:-
In the aforesaid Schedule, in Part IV, in clause (56), after sub-clause (xix), the following new sub-clause shall be added, namely:
"(xx) goods temporarily imported into Pakistan for subsequent exportation and which are exempt from customs duty and sales tax under Notification No SRO 1065(I)/2005, dated the 20th October, 2005.".