The Federal Board of Revenue (FBR) has ruled that the Trading Corporation of Pakistan (TCP) is a commercial importer of sugar and tax on import of sugar constitutes full and final discharge of tax liability of the TCP from this source of income.
In this regard, the FBR has issued a clarification to the Chief Commissioner Large Taxpayer Unit (LTU), Karachi regarding exemption from payment of duties and taxes on the import of 01.2 metric tons (MT) sugar by the TCP.
According to the FBR's clarification, since TCP is a commercial importer of sugar and tax on import of sugar constitutes full and final discharge of tax liability of the TCP from this source of income, exemption under reference is available only for advance payment of income tax on imports of sugar.
The FBR said that since vide FBR's letter No 1(13)Ex/2010, exemption from 4 percent (rate enhanced to 5 percent with effect from July 1, 2010) is operative on import of 1.2 MT Sugar by TCP, in pursuance to the order of the ECC in case No 09/01/2010 dated December 1, 2010, and no time limitations for such exemption has been laid down, therefore, there is no need for any extension in time for operation of this exemption.
On the direct taxes side, it is further clarified that since TCP is a commercial importer of sugar and tax on import of sugar constitutes full and final discharge of tax liability of the TCP from this source of income, exemption under reference is available only for advance payment of income tax on imports of sugar.
As far as Sales Tax and Federal Excise is concerned, the FBR said that a corrigendum has been issued on December 9, 2010 pertaining to 'exemption from sales tax and additional sales tax on the import of 1.20 million sugar by TCP" with the following wording:
"FBR's Special Exemption Order No 10/2010, dated 19th April, 2010 the words and figures 31st December, 2010, in the first para may be read as February 28, 2011".