Budget salient features related to Sales Tax, FED

ISLAMABAD: Federal Board of Revenue (FBR) issued budget salient feature related to sales tax and federal excise duty (FED) presented through Finance Bill, 2020.

RELIEF MEASURES

1. The minimum threshold of supplies by retailers for obtaining CNIC of the buyers is proposed to be increased from Rs 50,000 to 100,000;
2. In wake of COVID-19, the Federal Government granted exemption to health related items and equipment through SRO 237(I)/2020 dated 20-3-2020 which is going to expire on 19-6-2020. In the present circumstances vis-à-vis COVID-19, the said period is being extended for another three months starting from the 20th June 2020.
3. Exemption allowed on import of dietetic foods intended for special medical purposes for the children suffering from Inherited Metabolic Syndrome;

MEASURES FOR REMOVAL OF ANOMALIES

3(a) In order to encourage documentation, it has been decided to provide relief to organized retail sector which is integrated online with FBR through Point of Sale system. Their existing sales tax rate is proposed to be reduced from 14 percent to 12 percent

STREAMLINING MEASURES

4. Concept of conducting audit proceedings through electronic means introduced;
5. Ninth Schedule is proposed to be amended in line with Mobile Manufacturing Policy approved by the ECC of the Cabinet;
6. Insertion of the Tax Laws Amendment Ordinance 2019, relating to tax concessions and exemptions to Gawadar Port and Gawadar Free Zone, in the Finance Bill 2020;
7. To strengthen the Alternate Dispute Resolution process and to make it more taxpayer-friendly, it is proposed that the taxpayer is allowed to withdraw his case from any court of law or any appellate authority after decision of ADRC. Furthermore, the decision of ADRC, once it is conveyed by the taxpayer to the tax authorities, is binding upon the tax authorities;
8. The scope of section 73 is proposed to be widened to cover all registered persons supplying taxable goods;
9. Board is empowered to fix minimum production on the basis of single or more inputs and for fixation of wastage;
10. Real-time access to information and databases to the Board by various authorities such as NADRA, FIA, provincial excise & taxation departments etc.

SALIENT FEATURES

FEDERAL EXCISE DUTY

The proposed budgetary measures pertaining to Federal Excise Duty (FED) for FY 2020-21 are:

HEALTH RELATED MEASURES

1. Increase in the rate of FED on cigars, cheroots , and cigarillos and cigarettes from 65 percent to 100 percent of retail price; increase in the rate of FED on filter rods from Rs 0.75 to Rs 1 per filter rod;
2. Levy of FED on e-liquids of electric cigarettes @ Rs 10 per ml.
3. Levy of FED on caffeinated energy drinks @ 25 percent;

MEASURES FOR REMOVAL OF ANOMALIES

4. Levy of FED @ 7.5 percent ad valorem in case of locally manufactured double cabin (4×4) pick-up vehicles and @ 25 percent in the case of imported ones.

4(a) In the wake of worsening affect of COVID-19 and reduction in production of cement, it has been proposed to reduce FED on cement from Rs. 2 per kg to Rs. 1.75 per kg.

STREAMLINING MEASURES

5. Board is empowered to fix minimum production on the basis of single or more inputs and for fixation of wastage;
6. The scope of seizure of non-duty paid goods is extended to all products subject to FED besides cigarettes and beverages;
7. Real-time access to information and databases to the Board by various authorities such as NADRA, FIA, provincial excise & taxation departments etc.