Taking a major step to attract foreign investors, the government has decided to extend scope of sales tax exemption to all kinds of imported plant, machinery and equipment irrespective of the subsequent nature of local supplies of such imported machinery/equipment in the budget (2012-13).
Sources told Business Recorder here on Friday that the Federal Board of Revenue (FBR) is expected to announce a relief measure for the business community by giving sales tax exemption on the import of all kinds of plant and machinery and equipment from 2012-13. The existing conditions/restrictions relating to subsequent sales, nature of trade and discretion among imports ie commercial importer or industrial importer is proposed to be lifted. Under the new scheme, the proposed sales tax exemption would also be available on the local supplies of the plant and machinery. However, sales tax exemption would remain available on the imported machinery, whereas locally manufactured machinery and equipment would remain taxable.
As per existing scheme, sales tax exemption is available to the registered manufacturers on the import of plant and machinery (not locally manufactured) with certain restrictions. The same sales tax exemption is also available to the commercial importers, who have been engaged in the supply of such machinery to the registered manufacturers. However, the conditional clauses particularly pertaining to subsequent sales are going to be deleted from the notification which makes the scheme more practicable and attractive for the importers.
Sources said that a big facilitative measure would be announced in budget for all kinds of importers to enjoy sales tax exemption on every type of plant and machinery. The sales tax exemption would also be available on the local supplies of the plant and machinery. In this regard, the restrictions imposed under SRO.727(I)/2011 on the import of plant and machinery would be withdrawn and sales tax exemption would be available on the import of all kinds of plant, machinery and equipment including capital goods. However, sales tax exemption would be available on the import of machinery other than locally manufactured machinery and equipment.
According to sources, under the new scheme, sales tax exemption would be allowed on the import of machinery and equipment made by all kinds of importers including registered manufacturers, industrial importers and commercial importers. The sales tax exemption would be available to all kind of importers irrespective of nature of subsequent supplies to the concerned buyers.
Through amendment in the SRO 727(I)/2012 in budget (2012-13), sales tax exemption would be allowed on different types of imported plant, machinery, equipment and apparatus, including capital goods (other than locally manufactured). The sales tax exemption would also be allowed to all kind of importers irrespective of nature of subsequent supply at the local stage.