The Federal Board of Revenue (FBR) may introduce changes in the draft notification on the revamped zero-rating regime to address the issues raised by the Pakistan Chemicals and Dyes Merchants Association (PCDMA).
It is learnt here on Sunday that the FBR is likely to allow the registered commercial importers of dyes and chemicals to pay 50 per cent of the proposed tax at the import stage. This 50 per cent sales tax would be withheld at the import stage, which would be adjustable against the final tax liability. However, the commercial importers may not be able to claim the refund of the sales tax paid at the import stage. Sales tax at the rate of 5 per cent would be applicable on supplies made to the un-registered persons.
At present, the commercial importers are working as main supply source of raw materials for textile and other export sectors.
The FBR is expected to amend the draft of the notification taking into account the observations of the registered commercial importers. The FBR will not change the rate of 5 percent under the revised notification pertaining to zero-rating sectors, but the collection mechanism from the commercial importers is expected to be revised.
Under the existing draft notification, the goods imported by the registered commercial importers shall be charged to sales tax at the rate 5 percent of the value. According to the concerned association, this would create a serious distortion in the system in view of the fact that the FBR intends to charge higher rate of 5 percent sales tax from commercial importers for unknown reasons.
The association had contested the decision of imposing 5 percent sales tax on import of 148 raw materials, dyes/chemicals and goods under revamped zero-rating scheme which would replace the SRO 283(I)/2011 of April 1, 2011.