Further tax is required to be charged on supply of taxable goods to person who has not obtained registration or not an active taxpayer, subject to certain exclusions.
=======================================================================================================Description Heading=======================================================================================================Contraceptive and accessories thereof 3926.9020 4014.1000Bovine semen 0511.1000=======================================================================================================Saplings Respective Heading=======================================================================================================Combined Harvester -Thresher 8433.5100Dryer for agricultural products 8419.3400No-till-direct seeder, planters, trans-planters and other planters 8432.3100 8432.3900Import of goods as mentioned under S. No. 159 of Part III of Fifth Schedule 7471.3010, 8471.3020,the Customs Act, 1969 (IV of 1969) chargeable to customs duty at the rate of 8471.3090, 8471.4110,percent, subject to the conditions, restrictions and limitations mentioned 8471.6010, 8471.6020,therein, by the software exporters registered with the Pakistan Software Expo 8471.6090, 8471.7040,Board. 8471.9020, 8471.7020, 8471.5000, 8517.6270=======================================================================================================The FA has increased rate of further tax from 3% to 4%.
PREPARATION SUITABLE FOR INFANTS – ZERO RATING
Amendments enacted by Finance Act, 2023 vis-à-vis those proposed in Finance Bill 2023–I
At present, supply of ‘preparation suitable for infants’, put up for retail sale not exceeding Rs 500 per 200 grams as well as raw materials, packing materials, components etc. used in manufacturing thereof are subject to sales tax at the rate of 0%.
FA has enhanced the threshold of ‘Rs 500 per 200 grams’ to ‘Rs 600 per 200 grams’.
EXEMPTIONS
==============================================================Description HS Code Proposed duty==============================================================Imported and locally Respective Rs 2000manufactured energy heading per faninefficient fans whichdo not comply withthe MEPS, notifiedby PSQCAImported and locally 8539.2200 20%manufactured 8539.2990 ad valoremincandescent bulbs==============================================================Through the FB, import or supplies of following goods were proposed to be exempted from levy of sales tax:
The exemptions proposed have not been adopted in the FA. As a result, the above goods shall remain taxable at applicable rates.
DIAMMONIUM PHOSPHATE (DAP)
Import or supplies of DAP are exempt from sales tax. FA has withdrawn the exemption and made it taxable at reduced rate of 5% with no refund of excessive input tax.
PHARMA SECTOR
==========================================================================Description Existing Proposed in FB (%) but not adopted (%)==========================================================================PET scrap, if imported for the manufactureof polyester filament yarn 20 11Import of specified raw materials/inputs by manufacturers of Capacitors 16 5Printed Composite Packaging of AluminumFoil backed with Paper and Plastic 10 5==========================================================================Through FB, while specifying reduced rate of sales tax at 1% on ‘drug’, registered under Drugs Act, 1976, and ‘medicaments’ classifiable under Chapter 30 of the First Schedule to the Customs Act, 1969, it was proposed that input tax on such supplies would not be available in case of importer and manufacturer only. Now, through the FA, it has been provided that input tax adjustment would not be available to any person in the supply chain of such drugs/ medicaments.
================================================================================================PCT Code Description Rate of Regulatory Duty================================================================================================2849.1000 Calcium (Carbides) 5%3824.9980 Chloroparaffins liquid 10% till Dec 31, 2023 and 5% from January 1, 2024 to June 30, 20247002.3200 Tubes of other glass having a linear 10% coefficient ofexpansion not exceeding 5x10-6 per Kelvin within a temperature of 0 C to 300 C================================================================================================Further, through the FB, reduced rate of sales tax at 1% was restricted on raw materials/ingredients, including excipients, which are liable to customs duty not exceeding 11% ad valorem. The said restriction was made effective from July 1, 2022. As a result, the standard rate of sales tax had become applicable on aforesaid goods subject to customs duty above 11% retrospectively.
The FA has removed the retrospective application of aforesaid amendment. Further, bar on adjustment of input tax relating to these supplies, earlier specified by reference to importer and manufacturer only, has been made applicable in case of all the persons in the supply chain.
FEDERAL EXCISE DUTY
DUTIES OF EXCISE TO BE LEVIED
=======================================================================================================PCT code Description Existing Proposed % in FB but not adopted (%)=======================================================================================================2710.1995 Liquid paraffin 3 03206.4100 Ultramarine and preparations basedthereon 16 113823.7000 Industrial fatty alcohols 16 113920.4910 Polyvinyl Chloride (PVC) Rigid film 20 163920.9900 Plates, sheets, films, foils and strips of plastics 20 164805.2500 Testliner (recycled liner board) weighing more than 150 g/m² 20 16 Other uncoated paper or paperboard weighing 150 g/m² having di-4805.9190 electric strength less than 0.5 Kv per milimeter 20 164806.2000 Greaseproof papers 20 16 Centrifuges, including centrifugal dryers filtering or purifying8421.9990 machinery and apparatus for liquid or gases 20 16 Parts for use with the machines of headings 8501.5340, 8501.5390,8503.0020 8502.1110, 8502.1390 & 8502.2000 11 3=======================================================================================================Through the FB, a new clause (e) was proposed to be added to sub-section (1) of section 3 to read as under:
“(e) any item specified in the First Schedule”
It was statedly not a revenue measure but introduced as a streamlining measure, to further elaborate the chargeability of FED on goods and services. The FA has finally corrected clause (e) as under;
“(e) any item not covered in clause (a) to (d) above and specified in the First Schedule”
The amendment seems to cover imposition of FED on items which are neither goods (imported or manufactured) nor services, specified in the First Schedule.
FIRST SCHEDULE DUTIABLE GOODS
=================================================================================Description Existing Proposed Rate of Rate of duty duty=================================================================================Tobacco mixture in an electrically heated Rs 5,200 Rs 16,500 per kgtobacco product by whatever name called, per kgintended for consumption by using atobacco heating system withoutcombustionSugary Fruit juices, syrups and squashes, 10% of 20% ofwaters whether or not containing added retail price retail pricesugar or artificial sweeteners excludingmineral and aerated waters=================================================================================(a) The FA has increased FED on following goods which were not proposed in the FB:
(b) The FA has imposed FED on Fertilizers at the rate of 5% ad valorem.
(c) The levy of FED on following dutiable goods has been made effective from January 1, 2024:
CUSTOMS DUTY
FIRST SCHEDULE TO THE CUSTOMS ACT
Reduction in customs duty on import of following goods proposed through the FB has not been adopted in the FA:
In addition to above, changes have been made in various PCT heading as well as description to rationalize the duty structure.
FIFTH SCHEDULE TO THE CUSTOMS ACT (CONCESSION / EXEMPTION)
Exemption from Customs Duty on import of following goods proposed through the FB has not been accepted in the FA.
(i) Certain machinery, equipment, and inputs for manufacturing of solar panels, inverters and batteries by local assembler / manufacturer of renewable energy sector.
(ii) Seeds for sowing.
(iii) Raw materials imported by manufacturers of diapers & sanitary napkins;
(iv) Organic composite solvents and thinners for manufacture of Butyl Acetate and Dibutyl Orthophthalates.
(v) Roasted peanuts for manufacturing of Ready to Use Supplementary Foods (RUSF) & Ready to Use Therapeutic Foods (RUTF).
(vi) Specified raw materials/inputs by manufacturers of Adhesive Tapes, Moulds and Dies, Mining machinery, Machine Tools and Rice mill machinery.
(vii) Baby shrimp/prawns/juvenile for breeding in commercial fish farms and hatcheries.
(viii) Active Pharmaceutical Ingredients (APIs) Dextrose Anhydrous Injectable Grade (Pyrogen Free) USP
(ix) Gefitnib, Caspian (Caspofungin 50 mg and 70 mg injection) and Bovine Lipid Extract Surfactant
(x) Flavouring powders for food preparation.
Reduction in Customs Duty on import of following goods proposed through the FB has not been adopted in the FA:
The FA has not adopted reduction in the assessed value of the IT related equipment proposed through the FB for the purpose of levying customs duty, in case of imports by the software exporters registered with Pakistan Software Export Board.
Regulatory Duty (RD)
RD has been imposed on the following goods through the FA:
ISLAMABAD CAPITAL TERRITORY (SALES TAX ON SERVICES) ORDINANCE, 2001 (‘ICTO’)
The following amendments in the ICTO proposed through the FB have not been adopted in the FA:
(i) Reduction in sales tax rate applicable on IT services and IT enabled services to 5%; and
(ii) Exemption from sales tax registration granted to Freelance exporter.
FOREIGN INVESTMENT (PROMOTION AND PROTECTION) ACT, 2022
In December 2022, ‘Foreign Investment (Promotion and Protection) Act, 2022 [‘FIPPA’] was passed with a view to attract, encourage, and protect, large scale investments in Pakistan.
FB proposed amendments in the following fiscal laws to address procedural issues arising out of implementation of the exemptions and tax concessions provided in the FIPPA:
Income Tax Ordinance, 2001
Sales Tax Act, 1990
Federal Excise Act, 2005
The amendments relating to the Customs Act not proposed through the FB has now been made through the FA.
PETROLEUM PRODUCTS (PETROLEUM LEVY) ORDINANCE, 1961
Through the FA, the maximum petroleum levy rate as specified in the Fifth Schedule to the Petroleum Products (Petroleum Levy) Ordinance, 1961 has been increased from Rs. 50 to Rs. 60 for High Speed Diesel Oil and Motor Gasoline.
(Concluded)
Copyright Business Recorder, 2023