The Federal Board of Revenue has categorically conveyed to the Regional Tax Offices (RTOs) and Large Taxpayer Units (LTUs) that the supply of jute bags to government departments is chargeable to sales tax at the rate of 5 percent. Sources told Business Recorder here on Saturday that the FBR has issued instructions to all RTOs and LTUs to issue a clarification of applicability of sales tax rate on supply of jute bags to government departments under SRO.221(I)/2013, SRO.154(I)/2013 and SRO.1125(I)/2011.
According to the FBR's instructions, M/s Thai Limited's letter No TL/2013/1451 dated 22-03-2013 on the said subject and to say that the issue of chargeability of sales tax rate on supply of jute bags has been examined in the Board. According to condition (vi) of SRO 1125(1)/2011 dated 31-12-2011 (as amended vide SRO 154(1)12013 dated 28-02-2013 and SRO 221(1)/2013 dated 19-03-2013) supplies of the goods mentioned in the Table to persons outside the five sectors are chargeable to sales tax @ 5 percent. Since government departments do not belong to the five sectors, therefore, supply of jute bags to government departments is chargeable to sales tax @ 5 percent. The instructions have been issued to the field formations including Chief Commissioners of all RTOs/LTUs for information and guidance, the FBR added.