ISLAMABAD: The Federal Board of Revenue (FBR) will charge 25 percent sales tax on the import of mobile phones in Completely Built Up (CBU) condition having value exceeding USD 500 per set, according to updated Sales Tax Act, 1990 issued on Wednesday.

The FBR has issued the updated Sales Tax Act, 1990 and Federal Excise Act 2005 up to June 30, 2024, to incorporate amendments made in the sales tax/ federal excise laws through Finance Act 2024.

The FBR, on Wednesday, issued the amended Sales Tax Act, 1990 and the Federal Excise Act up to June 30, 2024.

Rise in tax on import of cell phones likely

The updated Sales Tax Act revealed that 25 percent sales tax would be charged on the import of mobile phones or satellite phones on the basis of import value (exceeding USD 500) per set, or equivalent value in rupees in case of supply by the manufacturer.

The 25 percent sales tax would be applicable on mobile phones in CBU condition at the time of import or registration (IMEI number by CMOs). However, 18 percent sales tax would be charged on imported CBU phones where value is not exceeding USD 500.

On the other hand, 18 percent sales tax would be charged on supply of locally manufactured mobile phones in CBU condition in addition to 18 percent sales tax applicable on import in CKD/SKD condition.

The rate of sales tax would be 18 percent on import in CKD/SKD condition and supply of locally manufactured mobile phones in CBU condition for both the values not exceeding USD 500 or exceeding USD 500.

The updated Sales Tax Act has incorporated new definition of “tax fraud” which means intentionally understating or underpaying the tax liability or overstating the entitlement to tax credit or tax refund in contravention of duties or obligations imposed under this Act by way of submission of false return, statements or false documents or withholding of correct information or documents to cause loss of tax.

Under the revised Sales Tax Act, the FBR has established Tax Fraud Investigation Wing-Inland Revenue. The functions of the tax fraud Investigation Wing Inland Revenue shall be to detect, analyze, investigate, combat and prevent tax fraud.

The tax fraud Investigation Wing Inland Revenue shall comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other Unit as may be notified by the Board through notification in the official Gazette.

The updated Sales Tax Act revealed that the Board through notification in the official Gazette, may require any person or class of persons to integrate their electronic invoicing system with the Board’s Computerized System for real time reporting of sales in such mode and manner and from such date as may be specified therein.

Any person who, submits a false or forged document to any officer of Inland revenue; or destroys, alters, mutilates or falsifies the records including a sales tax invoice; or knowingly or fraudulently makes false statement, such person shall pay a penalty of Rs25,000 or 100 percent of the amount of tax evaded or sought to be evaded, whichever is higher. He shall also be liable, upon conviction by a Special Judge to

imprisonment for a term which may extend to five years if the tax evaded or sought to be evaded is less than one billion, and which may extend to ten years if the tax evaded or sought to be evaded is one billion and above and fine which may extend to an amount equal to the amount of tax evaded or sought to be evaded, or with both.

The person who commits, causes to commit or attempts to commit the tax fraud shall pay a penalty of twenty-five thousand rupees or one hundred percent of the amount of tax evaded or sought to be evaded, whichever is higher.

He shall also be liable, upon conviction by a Special Judge to imprisonment for a term which may extend to five years if the tax evaded or sought to be evaded is less than one billion rupees, and which may extend to ten years if the tax evaded or sought to be evaded is one billion rupees and above, and fine which may extend to an amount equal to the amount of tax evaded or sought to be evaded, or with both, updated Act added.

Copyright Business Recorder, 2024