The Federal Board of Revenue (FBR) has allowed fans manufacturers to claim higher amount of input tax credit against their output tax liability on exports or local supplies of the finished products. Sources told Business Recorder here on Friday that the FBR wanted to end the hassle of sales tax refund payments to the fan industry.
For this purpose, input tax adjustment against the output tax liability has been allowed to the fan manufacturers engaged in exports or local supplies under SRO 1211(I)/2006.
There are raw materials like aluminium/aluminium products, electrical steel sheet, copper rod and plastic products, which are being used in the manufacture of ceiling fans, pedestal fans, exhaust fans and bracket fans. The finished products are either being exported or locally supplied in the market. The inputs were adjusted against the output tax under the arrangement available to the fans manufacturers.
On the basis of value of exports, inputs would be adjusted against output tax liability, sources said. Sources said the board has amended SRO 1211(I)/2006 through an SRO 740 issued on Friday. According to the amendments, extent of sales tax refund has been increased on the manufacture/export of ceiling fans from 6.46 to 9.86 percent of the freight on board (FOB) value; pedestal fans, 5.12 to 7.39 percent of the fob value; exhaust fans (plastic body) 4.74 to 8.39 percent of the fob value and extent of sales tax refund has been increased on the manufacture/export of bracket fans from 4.11 to 6.32 percent of the FOB value.
The board has allowed the refund of sales tax as input tax credit to the specified extent, paid on the import or local purchase of the raw materials used in the production or manufacture and export of goods. The refund of sales tax on inputs shall be allowed on the basis of excess input tax over and above output tax as mentioned in the monthly return to be filed by the fans manufacturer.
The refund claim under this notification shall be processed through manual scrutiny of purchase invoices and other documents and in the same manner, as far as applicable, as prescribed under Chapter V of the Sales Tax Rules, 2006. The payment of admissible refund shall be made within the time prescribed under the said Rules.
The refund of sales tax authorised under this notification shall be admissible in respect of goods exported on or after November 1, 2006, only by the manufacturers-cum-exporters, having sales tax registration numbers.
Provided that the sanctioning officer shall ensure that the amount of refund already paid or input tax adjusted against purchases made in the period prior to the November 1, 2006, is deducted from the refund payable under this notification to ensure that the refund is not paid twice against the same inputs.