ISLAMABAD: The federal government has decided to waive off domestic sales tax on import of sugar through Trading Corporation of Pakistan (TCP) as estimated retail price of imported sugar is over Rs 96 per kg with taxes and incidental charges, official sources told Business Recorder.

The sources said, the federal cabinet on August 4, 2020 decided to exempt import of sugar by TCP and recipient agency/ies to be nominated by the Ministry of Industries from all duties and taxes at the earliest to ensure timely and smooth transfer from ports, storage, logistics and supply to respective destinations.

According to sources on the direction of the ECC held on August 21, 2020, the TCP floated a tender with changed specifications of medium to fine quality of 100,000 MT wherein only 25,000 MT was awarded @ $ 434.8 PMT.

The TCP floated another tender of 100,000 MT and quantity of 76,700 MT offered against the tender at the rate of $ 425 PMT. Moreover, TCP was in process of floating another tender of 50,000 MT. It was anticipated that imported sugar of the TCP would start arriving in Pakistan from October 17, 2020.

Government of the Punjab's demand is between 200,000 to 300,000 MT sugar and accordingly Ministry of Industries and Production has nominated Government of the Punjab as the recipient agency. The present working shared by TCP shows that the price offered to recipients and subsequently estimated sale price would be between Rs 94.43 to Rs 96.27 per kg inclusive of landed cost of sales tax at the rate of 17 per cent, income tax 0.25 per cent, transport cost/packing/margin of Rs 8 per kg.

The sources said, Ministry of Industries and Production recently informed a meeting that as per SOPs intimated by Government of the Punjab, imported sugar is going to be sold at a rate monitored and controlled by the Government. This price, being more than the actual market price, may not attract any buyer from the recipient agencies and will require subsidy from the government.

Ministry of Industries and Production proposed that sales tax on supply of sugar imported by TCP of up to 300,000 MT may be exempted subject to arrival of such sugar and SRO 751(1)/2020 of August 20, 2020 of Revenue Division may be amended accordingly.

The ECC recently approved the proposal. A notification in this regard will be issued after the decision is ratified by the federal cabinet.

Copyright Business Recorder, 2020