The Central Board of Revenue (CBR) has reduced sales tax from 20 to 15 percent on the import of ingots, billets, iron and steel scrap and other items of steel/paper industries. Sales Tax has also been reduced from 20 to 17.5 percent on flat rolled iron and steel products. There will be no sales tax on the import of ships for breaking and re-meltable scrap.
The board has levied 2 percent extra sales tax on imports made by commercial importers in addition to the standard chargeable rate of sales tax and allowed 25 percent adjustment of excise duty to the beverage manufacturers.
The board on Thursday issued six notifications to facilitate steel, paper industry, ship breakers and beverage industry. Official sources told Business Recorder that the ship imported for scrapping and re-meltable scrap has been zero-rated. However, ship plates and re-rollable scrap obtained from ship breaking would be chargeable to 15 percent sales tax.
According to details, the board has rescinded SRO.466(I)/2007 through an SRO.644(I)/2007 for reducing sales tax to 15 percent on a number of items relating to steel sector, paper industry and chemicals. The new SRO.644(I)/2007 has two tables:
Table-I specifies the items chargeable to sales tax at the import and local supply stage at the rate of 20 percent. These include chemicals, plastic products, paper products and aluminium foil.
Table-II contains list of flat rolled iron and steel products, which will now be chargeable at the import and supply stage at the rate of 17.5 percent.
Through an SRO.645(I)/2007, two percent extra sales tax has been levied on imports made by commercial importers along with the standard sales tax. The importers paying 2 percent extra sales tax would not be required to pay any further sales tax on subsequent supply of their products.
Therefore, sales tax liabilities of commercial importers shall stand discharged at import stage.
Vide SRO.464(I)/2007, the rate of sales tax on re-meltable scrap and ships imported for breaking has been zero-rated. The relevant rules would no more remain applicable and ship breakers would operate under the new notification. According to SRO.647(I)/2007, seven categories of registered persons have been excluded from the condition of 90 percent input adjustment under section 8B of the Sales Tax Act, 1990.
The sectors are electric energy; oil marketing companies and oil refineries; fertilisers manufactures; manufacturers consuming raw materials chargeable to sales tax at the rate of 17.5 percent or 20 percent; wholesalers and distributors; wholesalers-cum-retailers and commercial importers.