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Tag: federal excise duty

  • Cut in tobacco tax under consideration

    Cut in tobacco tax under consideration

    KARACHI: The government is considering to reduce the federal excise duty on cigarettes in order to discourage duty evasion and stop smuggling.

    Sources said that proposals had been invited from stakeholders to rationalize the duty structure on tobacco industry.

    The sources said that the authorities were considering to reduce the FED rate by 10 percent in the upcoming budget 2021/2022.

    They said that a strong lobby was behind pressure for reduction in the rate for tobacco industry. It is learnt that the duty rate was proposed to cut because of large volume of smuggled cigarettes available in the market.

    Interestingly, the health ministry had proposed to increase the levy in order to discourage the use of cigarettes.

    The sources said that after the proposed reduction on the tobacco industry, the country would become having the lowest amount of taxes on the cigarettes use.

    For the last two years the government was raising the duty rate on the tobacco industry. However, the stakeholders were demanding to reduce the rate in order to stop the smuggling.

    The sources said that total revenue collection from tobacco industry was around Rs130 billion. Meanwhile, the tobacco industry assured that with the proposed reduction in duty the revenue would ultimately increase.

    To some estimates, the country was losing around Rs77 billion due to smuggled cigarettes.

  • FBR explains amendments to federal excise law

    FBR explains amendments to federal excise law

    ISLAMABAD: Federal Board of Revenue (FBR) has issued explanation to amendment made to Federal Excise Act, 2005 through Finance Act, 2020.

    The FBR through Circular No. 01 of 2020 dated August 06, 2020 explained the following amendments:

    01. ENLARGING THE SCOPE OF SEIZURE AND CONFISCATION OF THE NONDUTY PAID ITEMS SUBJECT TO FED

    In view of increasing trend of non-duty paid products and illicit manufacturing of excisable items and products, all products subject to Federal Excise Duty have now been made liable to seizure in case FED is not paid. Previously, the scope of such seizure was limited to cigarette and beverages sectors only.

    Now, if any product which is subject to FED is seized on account of non-duty payment, that will also be subject to confiscation. Necessary amendments in sections 26 and 27 of 2005 Act have been made accordingly.

    02. BOARD TO KEEP THE PARAMETERS OF AUDIT SELECTION CONFIDENTIAL

    The provisions relating to confidentiality of parameters of audit selection were inserted in the income tax and sales tax statutes in earlier Finance Acts, but the same were missing in the 2005 Act. As a part of the Board’s drive for harmonization of various tax statutes, section 42B has been inserted in the 2005 Act.

    03. OMISSION OF THE CONDITION OF AUDIT TO BE CONDUCTED ONCE IN THREE YEARS

    The provisions relating to condition that audit cannot be conducted more than once in three years were omitted in other statutes, hence for the purpose of harmonization the same has also been omitted from the 2005 Act.

    04. INCREASE IN THE RATE OF FED ON IMPORTED CIGARETTES AND OTHER SIMILAR PRODUCTS AND ELECTRONIC CIGARETTES

    (i) FED on imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes were fixed at 65% of the retail price.

    However, there was no clear distinction between the locally produced cigarettes and the imported ones. To resolve the matter Sr. No. 8 has been substituted and imported cigarettes have been separated from the rest of the categories like Cigars, cheroots, Cigrillos of tobacco or tobacco substitutes. The duty on imported cigarettes has been substituted as 65% of the retail price or the rate of duty as prescribed at Sr. No. 9, of the First Schedule, whichever is higher.

    (ii) At the same time, a separate Sr. No. 8b has been inserted for the rest of the categories like Cigars, cheroots, cigarillos and cigarettes, of tobacco and tobacco substitutes with duty defined as 65% of the retail price or ten thousand rupees per kg whichever is higher.

    (iii) However, there was no duty prescribed for the E-liquids for which the rate has now been notified at Rs.10 per ml. A new Sr. No. 8a has been inserted for this purpose. Thus by charging FED on these liquids, the e-cigarettes or machines have been subjected to FED.

    05. REDUCTION IN THE RATE OF DUTY ON CEMENT

    The rate of FED on Cement has been reduced from Rs. 2 per kg to Rs 1.50 per kg. It is applicable on both import and local supply.

    06. LEVY OF FED IN THE CASE OF 4×4 DOUBLE CABIN PICK UP

    FED structure is already in place for both local and imported motor cars and SUVs excluding auto rickshaw falling under the PCI heading 87.03 i.e primarily passenger transport. However, double cabin pick up vehicles were still outside the ambit of FED despite being primarily used as passenger transport in the country. Keeping in view its usage as a passenger transport vehicle in Pakistan, it has now been brought in the ambit of FED @ 7.5% ad valorem in case of locally manufactured vehicles and @25% in the case of imported ones. However, the locally manufactured vehicles which have been booked on or before the 30th June 2020 will not be subject to FED, subject to the conditions as specified by the Board separately.

    07. INCREASE IN THE RATE OF FED ON FILTER RODS

    Filter rod is basic input material for cigarette manufacturing. Previously, rate of FED on filter rods was Rs 0.75 per filter rod. To enhance the effect of monitoring and discourage tobacco consumption, duty on filter rods has been enhanced to Re. 1 per filter rod.

  • Caffeinated energy drinks are health hazard; FED enhanced to 25pc

    Caffeinated energy drinks are health hazard; FED enhanced to 25pc

    ISLAMABAD: The federal government has increased federal excise duty from 13 percent to 25 percent on consumption o f caffeinated energy drinks on both local supplies and import of such drinks.

    Hammad Azhar, Federal Minister for Industry and Production, while presenting the federal budget 2020/2021 on June 12 on floor of the house said that caffeinated energy drinks are health hazard, hence to reduce the consumption of such drinks it is proposed that the FED may be increased from 13 percent to 25 percent both at import and at local supply.

    It may be noted that aerated waters are already subject to FED at 13 percent.

    Further, FED on imported cigarettes, cheroots, cigarillos, cigars and other tobacco substitutes is being enhanced from 65 percent to 100 percent in line with WHO (World Health Organization) standards.

    Necessary changes are also proposed to be made in Table 1 of the First Schedule pertaining to aforesaid items to cover for tobacco substitutes as well as E-cigarettes, the minister said.

    Filter rod is a basic input material for cigarette manufacturing. Present rate of FED is Rs.0.75 per filter rod. To enhance the effect of monitoring and enforcement on tobacco consumption and tax management, it is proposed that the existing rate be enhanced to Rs.1 per filter rod.

    FED structure is already in place for both local and imported motor cars and SUVs excluding auto rickshaw falling under the PCT heading 87.03.

    Double cabin pick up which is currently classified as goods transport vehicle is being reclassified as passenger transport vehicle, which will bring it in the ambit of FED at 7.5 percent ad valorem in case of locally manufactured vehicles and at 25 percent in the case of imported ones.

    Sales tax is charged on standard rate of 17 percent on import and local supply of Potassium Chlorate and in addition to that Rs 70 per kg is also collected. On the recommendation of the Match manufacturers association the rate of Rs. 70 per kg is being enhanced to Rs. 80 per kg. Provided that rate of rupees 70/80 per kilogram is not applicable on imports made by and supplies made to organizations under the control of Ministry of Defense Production.

  • Budget salient features related to Sales Tax, FED

    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

    1. Concept of conducting audit proceedings through electronic means introduced;
    2. Ninth Schedule is proposed to be amended in line with Mobile Manufacturing Policy approved by the ECC of the Cabinet;
    3. 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;
    4. 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;
    5. The scope of section 73 is proposed to be widened to cover all registered persons supplying taxable goods;
    6. Board is empowered to fix minimum production on the basis of single or more inputs and for fixation of wastage;
    7. 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

    1. 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

    1. Board is empowered to fix minimum production on the basis of single or more inputs and for fixation of wastage;
    2. The scope of seizure of non-duty paid goods is extended to all products subject to FED besides cigarettes and beverages;
    3. Real-time access to information and databases to the Board by various authorities such as NADRA, FIA, provincial excise & taxation departments etc.
  • FBR extends last date for filing sales tax, federal excise return

    FBR extends last date for filing sales tax, federal excise return

    ISLAMABAD: The Federal Board of Revenue (FBR) on has extended the last date for filing sales tax and federal excise return for the month of September 2019.

    According to a notification issued on Friday, the FBR extended the last date for making payment of sales tax and federal excise duty for the month of September 2019 to October 22, 2019 from October 15, 2019.

    The FBR extended the last date for submitting sales tax and federal excise return for the month to October 25, 2019 from October 18, 2019.

  • FED imposition may negatively affect local automobile assembling: SBP

    FED imposition may negatively affect local automobile assembling: SBP

    KARACHI: The State Bank of Pakistan (SBP) has said that the imposition of federal excise duty (FED) may negatively affect local automobile industry as imported parts would become costlier.

    The enhancement of FED on imported vehicles could increase the demand for locally assembled vehicles. “However, because of increase in FED on the imported parts, automobile assemblers, who mostly rely on imported components, might be negatively affect,” the SBP said in its Financial Stability Review (FSR) released last week.

    FED on imported vehicles has been amended from 20 percent on vehicles above 1800cc to 25 percent for vehicles between 1800cc and 3000cc, and 30 percent for 3000cc or above.

    The central bank said that the automobile sector has the highest operational efficiency in the corporate sector.

    “It has, however, faced a contraction in the gross profit margin in CY18, as the bar on non-filers against purchase of new car affected the demand and the devaluation of the currency put pressure on production costs and profit margins.”

    Resultantly, local assemblers increased their prices to sustain profitability.

    “The outlook is positive in terms of enhanced production capacity as Kia, Hyundai and Renault are expected to enter the market in the coming years.”

  • FBR to collect FED on steel products, rescinds sales tax notification

    FBR to collect FED on steel products, rescinds sales tax notification

    KARACHI: The government has decided to collect federal excise duty from steel products instead of sales tax. In this regard the Federal Board of Revenue (FBR) has issued 992(I)/2019 dated September 04, 2019 to implement the decision.

    The FBR issued minimum values of locally produced goods for the purpose of payment of federal excise duty in sales tax mode on ad valorem basis, at the rate defined below under the First Schedule to the Federal Excise Act, 2005:

    01. Steel bars and other long profiles at the value of Rs83,000 per metric ton.

    02. Steel Billets at the value of Rs74,000 per metric ton.

    03. Steel Ingots/bala at the value of Rs72,000 per metric ton.

    04. Ship plates at the value of Rs72,000 per metric ton.

    05. Other re-rollable iron and steel scrap at the value of Rs71,000 per metric ton.

    The FBR further explained that in ccase the value of the goods specified in the Table above, as determined under sub-section (I) of Section 12 of the Federal Excise Act, 2005, is higher than the value fixed herein, the value of goods shall be such higher value.

    The FBR also rescinded the SRO 697(I)/2019 dated June 29, 2019 through SRO 993(I)/2019.

    Through SRO 697(I)/2019 the fbr issued the fixed value of locally produced goods for the purpose of sales tax on ad valorem basis under the Sales Tax Act, 1990.

    01. Steel bars and other long profiles at the value of Rs83,000 per metric ton.

    02. Steel Billets at the value of Rs74,000 per metric ton.

    03. Steel Ingots/bala at the value of Rs72,000 per metric ton.

    04. Ship plates at the value of Rs72,000 per metric ton.

    05. Other re-rollable iron and steel scrap at the value of Rs47,000 per metric ton.

    The SRO 697(I)/2019 was imposed from July 01, 2019.

  • FBR extends date of sales tax, FED payment

    FBR extends date of sales tax, FED payment

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday extended the last date for sales tax and federal excise duty (FED) payment for the month of July 2019 up to August 23, 2019.

    The FBR in an office order informed all Chief Commissioners Inland Revenue of Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs) regarding extension in the date for submission of sales tax and FED return for the tax period of July 2019.

    The FBR said that the date of payment of sales tax and FED for the tax period July 2019, which was due on August 10, 2019 and extended up to August 21, 2019, has been further extended up to August 23, 2019.

  • Finance Act 2019: FED imposed on all imported vehicles

    Finance Act 2019: FED imposed on all imported vehicles

    The federal government, under the Finance Act 2019, extended the application of Federal Excise Duty (FED) to all imported vehicles, aligning the tax regime with that of locally manufactured automobiles. This policy shift represents a significant move towards harmonizing the taxation framework across the domestic and import markets.

    (more…)
  • Finance Bill 2019: Special regime for steel sector abolished; normal tax at 17pc imposed

    Finance Bill 2019: Special regime for steel sector abolished; normal tax at 17pc imposed

    ISLAMABAD: The government has abolished special sales tax procedure for steel sector through Finance Bill 2019 and imposed 17 percent federal excise duty in sales tax mode.

    According to amendment proposed to Federal Excise Act, 2005 through Finance Bill 2019, normal tax of 17 percent ad valorem has been proposed on supply of steel billets, ingots, ship plates, bars and other long re-rolled products.

    A fourth schedule to FED Act has been proposed for minimum production of steel products.

    The minimum production for steel products shall be determined as per criterion specified below:

    01. Steel billets and ingots: one metric ton per 700 kwh of electricity consumed.

    02. Steel bars and other re-rolled long profiles of steel: one metric ton per 110 kwh of electricity consumed.

    03. Ship plates: 75 percent of the weight of the vessel imported for breaking.

    Procedure and conditions:–

    (i) Both actual and minimum production, and the local supplies shall be declared in the monthly return. In case, the minimum production exceeds actual supplies for the month, the liability to pay duty shall be discharged on the basis of minimum production:

    Provided that in case, in a subsequent month, the actual supplies exceed the minimum production, the registered person shall be entitled to get adjustment of excess duty on account of excess of minimum production over actual supplies:

    Provided further that in a full year, as per financial year of the company or registered person, or period starting from July to June next year, in other cases, the duty actually paid shall not be less than the liability determined on the basis of minimum production for that year:

    Provided also that in case of ship-breaking, the liability against minimum production, or actual supplies, whichever is higher, shall be deposited on monthly basis on proportionate basis depending upon the time required to break the vessel.

    (ii) The Board, may notify minimum values for steel products as mentioned in the Table above in exercise of powers under sub-section (5) of section 12.

    (iii) The payment of FED on ship plates in aforesaid manner does not absolve ship breakers of any tax liability in respect of items other than ship plates obtained by ship-breaking.

    (iv) The melters and re-rollers employing self-generated power shall install a tamperproof meter for measuring their consumption. Such meter shall be duly locked in room with keys in the custody of a nominee of the Commissioner Inland Revenue having jurisdiction. The officers Inland Revenue having jurisdiction shall have full access to such meter.

    (v) The minimum production of industrial units employing both distributed power and self-generated power shall be determined on the basis of total electricity consumption.