KARACHI: The sales tax laws have allowed zero rating of sales tax on exports or supply of goods.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 4 of the Act explained the zero rating.
Section 4: Zero rating
Notwithstanding the provisions of section 3 except those of sub-section (1A), the following goods shall be charged to tax at the rate of zero per cent:
(a) goods exported, or the goods specified in the Fifth Schedule;
(b) supply of stores and provisions for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);
(c) such other goods as the Federal Government may, by notification in the Gazette, specify:
Provided that nothing in this section shall apply in respect of a supply of goods which –
(i) are exported, but have been or are intended to be re-imported into Pakistan; or
(ii) have been entered for export under Section 131 of the Customs Act, 1969 (IV of 1969), but are not exported; or
(iii) have been exported to a country specified by the Federal Government, by Notification in the official Gazette:
Provided further that the Federal Government may by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero-rated supply of goods otherwise chargeable to sales tax.
(d) such other goods as may be specified by the Federal Board of Revenue through a general order as are supplied to a registered person or class of registered persons engaged in the manufacture and supply of goods supplied at reduced rate of sales tax.
