The Federal Board of Revenue (FBR) has released detailed explanations regarding the revised implementation of the federal excise duty (FED) on ghee and cooking/edible oils, as introduced through the Finance Act, 2019.
The FBR said these changes took effect from July 1, 2019.
Under the previous regime, the FBR said that FED on ghee and edible oils was charged at a rate of 16 percent, applied in the sales tax mode.
Manufacturers benefited from a simplification where a payment of Re 1 per kilogram of input oils absolved them from any additional payments related to value addition.
The FBR said that for manufacturers using input seeds, a payment of Rs. 40 per kilogram covered their liability for value addition. Additionally, solvent extraction units were relieved from the need to apportion input taxes. However, this regime has now been abolished.
The FBR has rescinded several statutory regulatory orders (SROs) that supported the old regime, including SRO 24(I)/2006 dated January 7, 2006, SRO 507(I)/2013 dated June 12, 2013, SRO 508(I)/2013 dated June 12, 2013, and SRO 68(I)/2006 dated January 28, 2006. Furthermore, the FED of Rs. 0.40 per kilogram of oilseeds, listed at Serial number 54 of the First Schedule, has been withdrawn through the omission of this serial.
The FBR said significant changes introduced in the new regime are as follows:
1. Increased Rate of FED: The rate of FED on ghee and cooking/edible oils has been increased from 16 percent to 17 percent.
2. Retail Packing: For products sold in retail packaging, the FED will now be calculated based on the retail price.
3. Refunds on Exports: Refunds on the export of these items, effective from July 1, 2019, will be determined based on the actual excess of input tax in accordance with the Sales Tax Rules, 2006, rather than on a fixed rate notification.
These changes aim to streamline the tax structure and ensure a more straightforward implementation process for manufacturers and exporters within the edible oils sector. The detailed explanations of the FBR are intended to help stakeholders adjust to the new regime and comply with the updated regulations.
