ISLAMABAD: The Federal Board of Revenue (FBR) started the preparations for charging 17 percent sales tax on local supplies of manufacturers-cum-exporters of five zero-rated sectors from July 1, 2019. The board also initiated stocktaking to avert any possibility of showing clearance of all stocks at zero percent (on papers) till June 30, 2019.
According to media, the FBR is apprehending that the zero-rated sectors may try to show on books that all stocks have been cleared at zero-percent sales tax before July 1, 2019 to avoid 17 percent sales tax on available stocks, sources added. According to the FBR instructions to the field formations, in pursuance of SRO 1125 (1)/2011 dated 31.12.2011, five zero-rated sector were chargeable to sales tax @ zero percent of reduced rate tax; however, in the budget 2019-2020, the federal government has proposed to rescind the aforesaid SRO and consequently, the five zero-rated sectors are proposed to be charged on sales tax at standard rate of sales tax @17 percent on local sales w.e.f. 01.07.2019. In this regard, there is apprehension of revenue leakage in the way that some taxpayers having massive inventories may under-declare their existing stocks.
The Board is therefore according approval under section 38 of the sales tax Act 1990 for conducting stocktaking maintained by all such taxpayers of five zero-rated /reduced rates of tax sectors, so that inventories chargeable to tax @17 percent may be correctly brought forward, FBR added.
A letter of the zero-rated export associations headed by Chairman Pakistan Apparel Forum (PAF) Javed Bilwani has been sent to Prime Minister Imran Khan to withhold rescinding of SRO 1125 and continue zero-rating at 0% sales tax regime – “no payment no refund” system.
