The Federal Board of Revenue may increase rate of sales tax on five export-oriented sectors - textile, leather, carpets, surgical and sports goods in budget (2014-15). Sources told Business Recorder here on Friday that the sales tax rate of industrial input has been proposed to be raised from 2 percent and 3 percent to 5 percent.
The sales tax rates of finished products are proposed to be increased from 5 to 17 percent. Likewise supplies made to unregistered persons may attract 17 percent sales tax instead of any other reduced rate. The sales tax rate of value addition sales tax on commercial importers has been proposed to be increased from 2 to 3 percent.
Sources said that these are proposals of the FBR and yet to be approved by the government. Ministry of Finance has to clear this FBR proposal before finalisation for the coming budget (2014-15). Thus, policy makers have to take final decision for acceptance or rejection of the said proposal of the FBR. The FBR has also proposed to amend the statutory regulatory order (SRO) dealing with lower rates of sales tax (2 to 5 percent) on five leading export-oriented sectors - textile, leather, carpets, surgical and sports goods.
Sources said that SRO.1125 is the only major export related SRO specifically dealing with export oriented sectors and applies multiple rates of sales tax on exports. Under the notification, 2 percent sales tax, 3 percent, 5 percent and 17 percent sales tax is applicable at different stages. The FBR is proposing amendments in SRO.1125(I)/2011 to revise sales tax structure on textile, leather, carpets, surgical and sports goods in the upcoming budget. Sales tax at the rate of 2 percent is applicable on yarn, 3 percent on fabric and 5 percent on garments, which is expected to be revised in budget (2014-15).