ISLAMABAD: The Federal Board of Revenue (FBR) is striving for a uniform rate of sales tax on all commodities and efforts are being made to eliminate the concessionary regimes.
“Presently, the standard rate of sales tax is 17%, however, the special rates of sales tax are changed on certain commodities with objectives to benefit public generally, increase exports, encourage manufacturing and providing incentives for agricultural growth,” an FBR source told Customs Today.
The source said that several SROs providing exemptions or concessions had been either rescinded or transposed into Schedule of Sales Tax Act 1990, in last budget, however, in current scenario, in order to generate the economic activities and welfare of general public, concessionary regime was still available in certain commodities/ sectors.
The source said that the budgetary measures pertaining to Sales Tax were aimed at rationalisation of sales tax on steel sector, ship breakers and steel melters operating in the sugar mills and these measures were enforced through amendment in the Sales Tax Special Procedure Rules 2007.
“Registration of retailers on two tier system basis including retailers part of national and international chains, located in air-conditioned malls having debit and credit machines and chargeability of the sales tax @ 5% in case of monthly electricity bill up to Rs 20,000 and @ 7.5% of the monthly electricity bill exceeding Rs 20,000 and were enforced through amendment in afore said rules,” the source added saying that Sales Tax Special Procedure Rules 2007 became effective from July 1, this year in both these cases.
However, the source said that input tax adjustment was proposed to be restricted only to the extent of goods and services actually used in manufacturing/sales of the taxable activity and electronic scrutiny and intimations system was to be introduced which would have to conduct all checks and analysis objectively and issue electronic intimations to the taxpayers and these were through Finance Bill 2014.
The source added that the capacity regime had led to excessive litigation and the Lahore High Court has passed order against the scheme, therefore, scheme had to be reverted to the normal tax regime through rescission of the Federal Excise Duty and Sales Tax on Production Capacity (Aerated Waters) Rules 2013 in July.
