ISLAMABAD: The Federal Board of Revenue (FBR) has reduced the annual turnover threshold for the cottage industry from Rs10 million to Rs8 million.

The FBR has issued a circular, on Thursday, to explain the Finance (Supplementary) Act, 2022.

For the purposes of documentation, competitiveness, and fair tax regime for all, the earlier threshold for the cottage industry of Rs10 million has been reduced to Rs8 million annual turnover from all supplies.

The rate of sales tax on imported electric vehicle (EV) in CBU condition has been enhanced from five percent to 12.5 percent.

Through SNos 55, 55B, 55C, and 55D of Table-1 of the First Schedule to the Federal Excise Act, 2005, the rates of the FED on imported, locally-manufactured motorcars/SUVs, imported, and locally-manufactured double cabin are provided respectively.

In order to rationalise the existing rates of the FED on vehicles, increase in various slabs has been made.

The FBR has retained exemption for imported fruits and vegetables from Afghanistan.

The person whose deductible tax under section 236G/236H of the Income Tax Ordinance, 2001 has exceeded a threshold as may be specified by the Board has also been included in the definition of a Tier-1 retailer.

The Board has been empowered to include/exclude any item from the Third Schedule. A new Directorate General for Digital Invoicing and Analysis has been provided in the Act.

Sugar has been excluded from the purview of Third Schedule with effect from 1st December 2021.

In order to facilitate general consumers, the condition of the CNIC has been withdrawn in case of payment made through debit/credit card or digital mode.

Under SNos 61, 62, and 63 of Table-1 of the Eighth Schedule, reduced rate of sales tax on silver, gold, and precious metals jewelry has been withdrawn being luxury items, which will not affect the common man.

Under SNo 66 of Table-1 of the Eighth Schedule, the rate of sales tax has been enhanced from 10 percent to 12 percent. Reduced rate of sales tax has been retained in respect of locally-manufactured hybrid electric vehicles.

Personal computers and laptops have been made chargeable to tax @ five percent, if imported in CBU condition.

Likewise, services liable to tax under the ICT (Tax on Services) Ordinance, 2001, are specified in the Schedule to the relevant Ordinance, along with the applicable rates.

However, there were a number of notifications in the field wherein, subject to certain conditions, reduced rates were provided in respect of some services.

In order to streamline and consolidate the taxable services and their chargeable rates under the ICT (Tax on Services) Ordinance, 2001, the existing Schedule was substituted as Table1 and a second table was inserted, incorporating the rates earlier notified through SROs at different timings, the FBR added.

Copyright Business Recorder, 2022