FBR directs customs to ensure retail price print on imported goods

KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to ensure printing of retail prices on imported goods for collection of sales tax while clearance of consignments.

The Inland Revenue Policy Wing issued directives on Wednesday to Inland Revenue and Customs for the implementation of changes brought in to Sales Tax Act, 1990 through Finance Act, 2019.

It said that the locally manufactured goods specified in Third Schedule are already chargeable to sales tax on the basis of retail price.

Now, through amendment in section 3(2)(a) of Sales Tax Act, 1990, retail price taxation has also been made applicable to imported goods.

The importers are required to print the retail price in the manner prescribed in the aforesaid clause and such goods shall be assessed on the basis of declared retail price and not on the basis of customs value under section 25 of the Customs Act, 1969.

“All Model Customs Collectorates (MCCs) are requested to ensure that the declared retail prices are duly printed in the prescribed manner and that the sales tax is charged on the basis of such declared retail price,” the FBR said.

Twelve new serial numbers have been added to Third Schedule through Finance Act, 2019 such as electric and gas appliances, motorcycles, auto-rickshaws biscuits, tiles etc.

The FBR directed Large Taxpayers Units (LTUs) / Regional Tax Offices (RTOs) / MCCs should ensure application accordingly.

The FBR defined the value of supply, which has been amended to provide for application of retail price taxation to imported goods, and also to incorporate provisions from rescinded rules and STGOs.

These modifications are enumerated below:

Amendment in clause (d) to exclude imported Third Schedule items from purview of application of ‘customs value’ determined under section 25 of the Customs Act, 1969. These items are to be assessed on the basis of declared retail price. Further such price is also required to be printed on imported goods as stipulated in clause (a) of section 3(2) of the Sales Tax Act, 1990.

(ii) Substitution of clause (f) in section 2(46) pertains to value of supply in case of toll manufacturing, which has defined to be the charges received in lieu of value addition carried out on goods;

(iii) Newly added clause (h) defines value to be energy purchase price in case of supply by IPPs; and

(iv) Another new clause (i) transposes the provisions relating to exclusion of late payment surcharge from value, in case of supply of electricity and gas by the distribution companies, from the rescinded Sales Tax Special Procedures Rules, 2007.

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