ISLAMABAD: The Federal Board of Revenue has granted zero-rating of sales tax on import of textile machinery.
The FBR allowed zero-rating on textile machinery (not manufactured locally and imported by the unit registered with Ministry of Textile Industry as specified in Part IV of the Fifth Schedule to the Customs Act, 1969, subject to same conditions as specified therein) through SRO 36(I)/2017, dated 23.01.2017 by further amending SRO(I)/2011, dated 31.12.2011.
The said zero-rating of sales tax was granted in compliance with package announced by the Prime Minister of Pakistan on 10.01.2017 to incentivize exports. The SRO had sunset clause whereunder zero-rating on import of above textile machinery was available till June 30, 2018. Ministry of Commerce and Textile (Textile Division) moved Summary for ECC of the Cabinet for extension of export package beyond June 30, 2018. The Summary proposed continuation of zero-rating on import of textile machinery and ws approved by ECC of the Cabinet and ratified by the federal cabinet.
Powers to grant zero-rating of sales tax under clause (c) of section 4 reat with section 71 of the Sales Tax Act, 1990 are vested in the federal government with effect from July 1, 2018 by virtue of amendments made in the said provisions of the Sales Tax Act, 1990. The federal government has bee ndefined as the federal cabinet including the prime minister as held by the Supreme Court of Pakistan in case reported as PLD 2016 SC 808. Accordingly, the Ministry of Commerce and Textile (Textile Division) has been requested to obtain and provide approval of the federal cabinet for issuance of SRO to notify zero-rating of sales tax on textile machinery mentioned in SRO 36(I)/2017, dated 23.01.2017.
In the meanwhile, it is requested that textile machinery qualifying for zero-rating of sales tax under SRO 36(I)/2017, dated 23.01.2017 may be cleared provisionally under section 81 of the Customs Act, 1969 by allowing zero-rating of sales tax on such imports.
