The Federal Board of Revenue has decided to grant sales tax exemption on import of plant and machinery (not manufactured locally) on submission of post-dated cheques by registered manufacturers/industrial importers and bank guarantees/pay orders, etc, by commercial importers equal to the amount of sales tax payable at import stage.
Sources told Business Recorder here on Thursday that the FBR has finalised the notification, which would be shortly issued to fulfil a major demand of the industry and trade. Under the new arrangement, the FBR will exempt sales tax on the import of plant and machinery not manufactured locally and having no compatible local substitutes. The plant and machinery would mean such plant and machinery as is used in the manufacture or production of goods. However, sales tax exemption on the import of plant and machinery would be available on fulfilment of certain conditions.
Firstly, the registered manufacturers/industrial importers shall submit to the customs authorities post-dated cheques equal to the amount of sales tax payable at import stage which shall be returned back on the filing of first sales tax return after import of the machinery.
Secondly, the commercial importers shall submit to the customs authorities good for-payment cheque or bank guarantee or pay order or pay in cash equal to the amount of sales tax payable at import stage, which shall be returned back, or as the case may be, refunded after providing evidence of next supply to the registered manufacturer or industrial users.
Thirdly, local supply of plant and machinery by commercial importers to unregistered industrial regimes or commercial regimes shall be liable to tax and evidence to that effect shall be produced to the customs authorities for release of the said instrument or refund of the amount paid at import stage.
Fourthly, subsequent supply of plant and machinery imported or acquired and used by registered manufacturers or registered industrial users to unregistered industrial regimes or commercial regimes whether registered or not, shall be liable to tax. Fifthly, the validity period of instruments furnished shall not be less than 120 days.