Official data released on Monday indicates a remarkable upswing in the collection of customs duty from imported vehicles during the fiscal year 2020/2021, reflecting a staggering 95 percent growth, reaching Rs111 billion. This surge is in stark contrast to the Rs56.85 billion recorded in the preceding year.
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Budget 2021/2022: Duty, taxes abolished on cars up to 850cc
ISLAMABAD: The government has announced abolishing duty and taxes on locally manufactured and imported cars with engine capacity up to 850cc to enable low earning families to afford motor vehicles.
Finance Minister Shaukat Tarin while presenting federal #budget 2021/2022 on Friday announced duty and tax incentives for sale and import of motor cars with engine capacity up to 850cc.
The finance minister made following announcement:
Withdrawal of FED and Reduction in Sales Tax on Locally Manufactured cars up to 850 cc: Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly, it is proposed that small cars upto 850 cc capacity may be exempted from levy of FE besides reducing Sales Tax rate from 17% to 12.5% and withdrawing value added tax.
Exemption from Withholding Tax on Import: It is proposed that no tax may be collected on imports of books, journals, agriculture equipment and motor vehicles in CBU condition upto 850 cc.
To incentives this sector further additional custom duty and regulatory duty on CBU import of vehicles upto 850cc are being exempted.
Whereas relief to existing manufacturing industry and new models is also being provided by removing Additional Customs Duty (ACD) and rationalizing the tariff structure.
Due to these targeted interventions the middle class of this country will be able to afford a car of this specific category and will accrue the benefits of governments flagship projects of “Meri Gari Scheme” which will enable many countrymen who wish to graduate from motorcycle to own their car by providing small car at an affordable price.
Moreover further incentives in the form of reduction of customs duties are also being provided to electric vehicles for one year to promote the culture of electric vehicle in Pakistan.
Similarly, keeping in view the changing international motorcycles trend usage of local manufacturing of heavy motorcycles and specific categories of trucks and tractors are also being incentivised by rationalizing the tariff structure.
Tax Incentives for promoting electric vehicles: To address environmental issues, reduce reliance on gasoline and provide cheaper source of transportation to public, Government of Pakistan is encouraging the manufacture and use of electric vehicles.
For this purpose, various tax exemptions and concessions are being proposed, which include tax exemption on import of CKD kits for local manufacturing of electric vehicles, reduction in sales tax rate on locally manufactured electric vehicles from 17% to 1%, withdrawal ofvalue addition tax on import of electric vehicles and CKD kits and withdrawal of federal excise duty on 4-wheelers electric vehicles.
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Budget 2021/2022: salient features of budgetary measures in Customs Duty
ISLAMABAD: The federal government on Friday presented budget 2021/2022 and announced measures in regime of customs duty.
GUIDING PRINCIPLES
(a) Remove anomalies in cascading structure of tariff
(b) Promote and protect domestic industry by introducing targeted interventions
(c) Enhance import-substitution by rationalizing tariffs on industrial raw materials / intermediate goods
(d) Facilitate export-oriented manufacturing by reviewing the existing exemption regimes & export schemes
INDUSTRIAL RELIEF MEASURES
1. Reduction / exemption of CD, ACD & RD on import of goods falling under 589 PCT codes to incentivize the textile industry.
2. Reduction / exemption of CD, ACD & RD on import of flat rolled products of HRC and stainless steel.
3. Reduction / exemption of CD and ACD on raw materials and intermediary goods and point of sale machines falling under 328 tariff lines as a consequent of tariff rationalization.
4. To incentivize the pharmaceutical sector and to keep the prices stable in the market, –
Exemption of CD & ACD on more than 350 APIs
Plant, machinery and equipment subject to concessionary rate of 5%
Exemption of CD & ACD on raw material of auto-disable syringes and Reduction in tariff on finished auto-disable syringes
5. Reduction / exemption on inputs / raw materials of food processing industry.
6. Reduction of CD & ACD on uncoated paper and paperboard for printing and graphic arts industry.
7. Reduction / exemption of CD & ACD on Vaccines for veterinary medicines and feed additives to incentivize the dairy sector.
8. Reduction / exemption of CD & ACD on goods falling under more than 100 PCT codes relating to Tourism industry.
9. Reduction of duties on raw material/inputs of footwear industry.
10. Reduction / exemption of CD & ACD on inputs for poultry industry.
11. Reduction / exemption of CD & ACD on raw material for manufacturer of aseptic plastic packaging.
12. Exemption of ACD on import of raw materials for cables / optical fiber manufacturers.
13. Reduction / Exemption of CD & ACD on raw materials for Paint Industry.
14. Reduction / Exemption of CD & ACD on raw materials for Chemical and Artificial Leather Industry.
15. Reduction / Exemption of CD & ACD on inputs for Electronics Manufacturing Industry.
16. Reduction / exemption of CD & ACD on raw materials / inputs of furniture, coating, boiler manufacturing industry, bobbins and cops manufacturing industry etc.
RELIEF TO COMMON MAN
17. Reduction of ACD on goods falling under 2436 tariff lines pertaining to 20% customs duty slab from 7% to 6%.
18. Extension in exemption from customs duties on import of COVID-19 related items for further six month.
19. Exemption of CD &ACD on Inputs of Ready-To-Use Supplementary Foods (RUSF) and Ready-To-Use Therapeutic Food (RUTF).
20. Exemption of CD & ACD on 06 life-saving drugs.
21. Enhance the value of unsolicited gifts through post or courier from Rs.20,000 to 30,000.
22. Exemption of CD & ACD on import of grain storage hermetic bags and cocoons.
23. Rationalization of tariff structure on auto sector.
REVIEW OF REGULATORY DUTY (RD) REGIME:
24. Rationalization of RD on import of Mobile Phones to encourage import substitution
25. Increase in rates of RD on import of non-essential / luxury items to support local industry.
26. Reduction of RD on import of cocoa paste, butter and powder being industrial input goods.
EXPORT FACILITATION MEASURES:
27. To ease of doing business, a new Uniform Export Facilitation Scheme is being proposed. The existing schemes shall be phased out in next two years.
28. Bond to Bond Transfer of goods through WeBOC without prior approval of the Collector is being proposed to be allowed.
29. Reduction of RD on export of molasses, skin and hides to boost positive image of the country with our important trading partners across the world.
MISCELLANEOUS
1. Establishment of Border Sustenance Markets to mitigate the problems faced by the people residing in border areas due to fencing and counter-smuggling measures.
LEGISLATIVE CHANGES:
1) Introduction of a concept of Common bonded warehousing to encourage Small and Medium Enterprises.
2) Empowering Collector of customs to determine customs value there by facilitating trade.
3) Enabling the Director General Valuation to take appropriate decision on appeal and capping the time limit for such proceedings. Facilitation of trade by avoiding time consumed in unnecessary litigations.
4) Allowing the importers to amend manifest till berthing event without seeking approval from custom authorities and hence ease of doing business.
5) Enable customs authorities to allow bonafide amendment in into-bonds goods declaration and thus facilitate trade.
6) Allowing the Collector to extend warehousing period for six months. Reducing the processing time of the requests and promoting ease of doing business.
7) Reducing the time limit allowed for decision of the cases wherein the impugned goods are lying at sea ports, airports or dry-ports and thus decreasing the cost of doing business.
8) Enable customs authorities to issue correction / corrigendum certificate in case of genuine / obvious error and facilitate trade.
9) Inclusion of other law enforcement agencies for the purpose of reward and increasing their motivation.
10) Affording opportunity of being heard to the registered users of WeBOC in accordance with the canons of natural justice.
11) Increasing the period of validity of advance ruling from the current one year to three years in accordance with international benchmarks and facilitating trade thereof.
12) Provision for the classification committee to avoid unnecessary litigation on account of classification disputes and consequently decreasing the cost of doing business.
13) Removal of fine in case of delay in filing of goods declaration and thereby providing ease of doing business.
ENFORCEMENT FEATURES:
1) Inclusion of master bill of lading and certificate of origin in the existing definition of document to discourage origin fraud.
2) Inclusion of the retailing in definition of smuggling to discourage retailers from selling smuggled goods.
3) Making shipping lines responsible for re-export of banned items imported in commercial quantities.
4) Increasing the pitch of fine in case of non-placement of invoice and packing list in container to inculcate compliance.
5) Discouraging smuggling by denying release of vehicles used repeatedly for smuggling against redemption fine.
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FBR allows duty free import of oxygen manufacturing plants
The Federal Board of Revenue (FBR) in Pakistan announced on Monday the grant of duty exemption on the import of critical oxygen-related goods.
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FBR notifies duty exemption on cotton yarn import
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified exemption of customs duty on import of cotton yarn till June 30, 2021.
The FBR issues SRO 533(I)/2021 to comply with the decision of Economic Coordination Committee of the Cabinet (ECC) to exempt whole of customs duty on import of cotton and cotton yarn.
The ECC on April 14, 2021 approved the withdrawal of customs duty to ensure smooth supply of cotton and cotton yarns to the value-added industry, while bridging the gap between domestic production and overall demand for the inputs.
The FBR allowed duty exemption on cotton yarn on import of following categories:
— Cotton Yarn (other than sewing thread), containing 85 percent or more by weight of cotton, not put up for retail sale.
— Cotton Yarn (other than sewing thread), containing less than 85 percent by weight of cotton, not put up for retail sale.
— Cotton Yarn (other than sewing thread) put up for retail sale.
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ECC approves customs duty withdrawal on cotton, yarn import
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved the withdrawal of customs duty to ensure smooth supply of cotton and cotton yarns to the value-added industry, while bridging the gap between domestic production and overall demand for the inputs.
Federal Minister for Finance, Revenue, Industries and Production, Muhammad Hammad Azhar, chaired the ECC meeting.
Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Maritime Affairs Ali Haider Zaidi, Federal Minister for Energy Omar Ayub Khan, Federal Minister for National Food Security and Research Syed Fakhar Imam, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, SAPM on Power and Petroleum Tabish Gauhar, Federal Secretaries, senior representatives of Provincial governments, Chairman BOI and other senior officers participated in the meeting. Governor State Bank of Pakistan joined through a video link.
Power Division presented a summary regarding waiver of minimum 66% Take-or-Pay commitment in Power Purchase Agreement(s) (PPA) & Gas Supply Agreement(s) (GSA) of three RLNG based Public Sector Power Plants namely Quaid-e-Azam Thermal Power Plant, Balloki Power Plant and Haveli Bahadur Shah Power Plant.
These amendments would envisage submission of a Monthly Production Plan (MPP) as a binding on the Power Purchaser and the Power Seller wherein the Power Purchaser shall be entitled to submit demand requirement as needed, at least seventy five days before the start of each such month, which will be finalized by the System Operator and Operating Committee under the PPA.
The concept of a Monthly Delivery Plan (MDP) for deliveries of Gas under the GSA, has been paired with the Monthly Schedule as provided under PPA. The MPP will come into effect from the year 2022.
After seeking input from relevant stakeholders, the Committee approved the summary and appreciated the concept of Monthly Production Plan (MPP) as a cost-effective solution, enabling the Power and Gas purchasers to make requisite purchases in line with actual requirements instead of following a fixed arrangement.
Power Division also presented another summary proposing amendment to the Facilitation Agreement and Amendment to the GoP Guarantee Agreement with KAPCO. It included the proposal that the project may be withdrawn from the Privatization Commission and entrusted to Private Power and Infrastructure Board (PPIB).
After due deliberation, the Committee approved the summary, in principle, subject to formal vetting by the Law Division. Secretary, M/o Commerce presented a summary before the ECC for withdrawal of Customs Duty on import of Cotton Yarns under PCT 5205, 5206 and 5207 till 30th June, 2021.
The ECC also approved a Technical Supplementary Grant for Finance division amounting to Rs.11.7 billion as the share of the Federal Government for the establishment of 4 mother and child hospitals in Punjab.
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Duty rebate payment to textile sector increases by over 100pc
ISLAMABAD: The payment of customs duty rebate to textile sector increased by over 100 percent during tax year 2020, which shows the commitment of Federal Board of Revenue (FBR) to facilitate the most import sector for resolving liquidity issues.
The payment of customs duty rebated was Rs18.31 billion during tax year 2020 as compared with Rs9 billion in the preceding tax year, showing an increase of 103.33 percent.
According to details released by the FBR, the major chunk of the rebate payment to textile sector was issued to ready-made garments and fabric made-ups.
The payment of customs duty rebate to ready-made garment industry was Rs6.5 billion during tax year 2020 as compared with Rs1.88 billion, showing a growth of 246 percent.
Similarly, the payment of duty rebate to fabric and made-up increased to Rs6.41 billion in tax year 2020 as compared with Rs1.12 billion in the preceding tax year, showing a rise of 472 percent.
The FBR has taken all possible measures to provide relief through payment of refunds and rebate to sectors of the economy for resolving liquidity issues during coronavirus pandemic.
The FBR issued rebate to the tune of Rs1.56 billion to hosiery industry during tax year 2020 and Rs1.24 billion to cotton fabric industry.
The FBR issued an amount of Rs24.4 billion as a total duty rebate during tax year 2020 as compared with Rs14 billion in the preceding tax year, showing an increase of 74 percent.
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Duty exempted on import of medical equipments for prevention, treatment of COVID
ISLAMABAD: Federal Board of Revenue (FBR) on Monday exempted customs duty, regulatory duty and additional customs duty on import of medical instruments and equipments for prevention and treatment of COVID pandemic.
The FBR issued SRO 1251(I)/2020 dated November 23, 2020 to exempt whole of customs duty, regulatory duty and additional customs duty on import of around 61 items. The exemption has been granted on import of such goods with effect from October 04, 2020 to June 30, 2021.
Following goods are exempted from customs duty, regulatory duty and additional customs duty:
01. Real-time PCR system (standard 96-well plate and 0.2ml tubes format, 5 channel)
02. Biosafety cabinet
03. Auto Clave 50 liter capacity
04. Multi channel pipette (0.5 – 10 ul)
05. Single channel pipette
06. Multi channel pipette 20-200 ml
07. Vacuum fold
08. Micro Centrifuge (Non-refrigerated, Rotor capacity 12X 1.5/2.0ml vessles, 2XPCR strip, Max. Speed: 12, 100 x g (13,400 rpm)
09. PCR cabinet (HEPA filter system, UV and white light)
10. Real-time PCR kit for the detection of Coronavirus (SARS-CoV-2)
11. Viral RNA Extraction Kit and machine (Automatic Extractor)
12. VTM (Viral Transport Medium)
13. Dr Oligo Synthesizer
14. Refrigrator/freezer (-20C)
15. Vortex Machine
16. Refrigerated Centrifuge Machine (Rotor capacity 1.5ml x 24, max. speed 14000 rpm)
17. UPS (6 KVA)
18. Tyvek Suits
19. N-95
20. Biohazard bags (18 liters)
21. PAPR (Powdered Air Purifying respirators)
22. Multimode ventilator with air compressor
23. Vital sign monitor with 21BP and ETco2 two Temp.
24. ICU motorized patient bed with side cabinet and over bed table
25. Syringe infusion pump
26. Infusion pump
27. Electric suction machine
28. Defibrillator
29. X-Ray Mobile Machine
30. Simple Nebulizer
31. Ultrasound machine
32. Noninvasive BIPAP
33. ECG Machine
34. Pulse Oximeters
35. Ripple Mattress
36. Blood gas analyzer
37. AMBU Bag
38. Nitrile Gloves
39. Latex Gloves
40. Goggles
41. Face Shields
42. Gum Boots
43. Mackintosh bed sheets
44. Surgical Masks
45. Air Ways
46. Diaflow
47. Disposable Nebulizer Mask Kit
48. ECG Electrodes
49. ETT Tube (Endotracheal Tubes) All sizes
50. Humidifier Disposable Flexible
51. IV Cannula all sizes
52. IV Chambers
53. Oxygen Recovery Kit
54. Padded Sheets
55. Stomach Tube
56. Stylet for Endotracheal Tube
57. Suction Tube control valve
58. Tracheostomy Tube 7, 7.5, 8
59. Ventilator Circuit
60. Ventury Masks
61. Disposable shoes over (water proof)
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Budget salient features related to customs duty
ISLAMABAD: Federal Board of Revenue (FBR) issued budget salient feature related to Customs duty presented through Finance Bill, 2020.
Industrial Relief Measures
- Exemption of additional custom duties on those tariff lines which are now @ 0 percent customs duty in tariff.
- Reduction of custom duty on 40 raw materials of various industries.
- Tariff rationalization under National Tariff Policy 2019, by reducing customs duty on 90 tariff lines from 11 percent to 3 percent and 0 percent.
- Allowing the exemption on import of raw material to those Nashiran-e-Quran also who do not have their own in-house printing facility.
- Reduction in regulatory duty from 12.5 percent and 17.5 percent to 6 percent and 11 percent, respectively on Hot Rolled Coils (HRC) of Iron and steel falling under PCT codes 7208 and 7225& 7226, respectively.
- On the request of various local industries, a number of their inputs/intermediary raw materials are being allowed concessional import under new serial number of the fifth schedule through IOCO quota determination.
• Exemption of custom duties on import of raw materials by manufacturers of Butyl Acetate.
• Exemption of custom duty on import of raw material by manufacturer of syringes and saline infusion sets.
• Exemption of customs duties on import of raw material by manufacturers of buttons.
• Reduction in custom duty on import of raw material by manufacturers of interlining/buckram.
• Reduction of custom duty and exemption of additional custom duty and regulatory duty on import of raw materials by manufacturers of Wire rod
• Exemption of custom duties and regulatory duty on import of machinery, equipment and other project related items for setting up of internet cable landing stations.
• Exemption of custom duties on import of raw material by beverage can manufacturers.
• Reduction in Custom duty and exemption from Additional custom duty on import of raw material by food packaging industry.
Relief to Common Man
- Exemption from customs duties on import of 61 COVID19 related items, which was due to expire on 20th June has been extended due to the continuation of pandemic.
- Exemption from 2 percent ACD on import of edible oils and oil seeds under PM’s COVID19 Relief Package has been extended.
- Exemption of duties & taxes on import of Dietetic Foods for Children with inherited metabolic disorders.
- Exemption of all duties & taxes on import of Diagnostic Kits for Cancer and Corona Virus.
- Exemption of Customs duties on inputs of Ready to use Supplementary Foods (RUSF).
- Exemption of Customs duties on import of life saving drug Meglumine Antimonite for treatment of leishmaniasis.
- Extension up to 2023, in exemption of customs duties on imports for setting up new industries in erstwhile FATA area.
Miscellaneous
- Reduction in regulatory duty on smuggling prone items to bring these items under legal imports
- Regulatory duty on several industrial inputs is also being reduced to decrease their cost of doing business
- Tariff protection for domestic industry by increasing/levy of regulatory duty on import of those items which are also locally manufactured
- Incentivizing soap manufacturing industry by reducing rate of Additional customs duty on Palm Stearin
- Enhancing scope of concessions available to Special Economic Zones.
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FBR suggested to reduce customs duty to 5 percent on steel products
The Karachi Chamber of Commerce and Industry (KCCI) has proposed a significant reduction in customs duty on steel products in its budget proposals for 2020/2021.
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