In a move to enhance tax compliance, the Federal Board of Revenue (FBR) has imposed an additional sales tax of up to 17% on unregistered industrial and commercial connection holders of electricity and gas utilities.
(more…)Tag: sales tax
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Sales tax exemption granted to medical equipment
The Federal Board of Revenue (FBR) has granted sales tax exemption on the import of essential medical equipment. The FBR issued SRO 1007(I)/2021 on Monday, listing a comprehensive array of medical goods that will be exempted from sales tax, aiming to facilitate the procurement and availability of critical equipment.
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FBR reduces sales tax rate on petrol to 10.77%
In a move aimed at providing relief to consumers, the Federal Board of Revenue (FBR) has announced a reduction in the sales tax rate on the supply of petrol. The new rate, effective immediately, is set at 10.77%, down from the previous rate of 16.40%.
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FBR prescribes minimum output of steel products for sales tax payment
ISLAMABAD: The Federal Board of Revenue (FBR) has prescribed minimum production of steel products for payment of sales tax under Thirteenth Schedule of Sales Tax Act, 1990.
According to Finance Act, 2021 an amendment has been made to Section 3 of the Sales Tax Act, 1990 in respect of goods, specified in the Thirteenth Schedule, the minimum production for a month shall be determined on the basis of a single or more inputs as consumed in the production process as per criterion specified in the Thirteenth Schedule and if minimum production so determined exceeds the actual supplies for the month, such minimum production shall be treated as quantity supplied during the month and the liability to pay tax shall be discharged accordingly.
In the Thirteenth Schedule following has been inserted:
Minimum production of steel products.—
The minimum production for steel products shall be determined as per criterion specified against each in the Table below:
S. No. Product Production criteria (1) (2) (3) 1. Steel billets and ingots One metric ton per 700 kwh of electricity consumed 2. Steel bars and other re-rolled long profiles of steel One metric ton per 110 kwh of electricity consumed 3. Ship plates and other re-rollable scrap 85% of the weight of the vessel imported for breaking”; and 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 tax 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 tax 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 of next year, in other cases, the tax actually paid shall not be less than the liability determined on the basis of minimum production for that year and in case of excess payment no refund shall be admissible:
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 payment of tax 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;
(iii) 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;
(iv) the minimum production of industrial units employing both distributed power and self-generated power shall be determined on the basis of total electricity consumption.
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Budget 2021/2022: sales tax on sugar to be imposed on retail price
ISLAMABAD: The government has announced to bring sugar in the third schedule of Sales Tax Act, 1990 to impose sales tax on actual retail price.
Finance Minister Shaukat Tarin while presenting budget 2021/2022 on Friday announced inclusion of sugar in the third schedule.
He said that sugar, although not a staple food, is still a source of daily caloric intake for millions of people in Pakistan.
Recently, an unprecedented increase in the prices of sugar has been witnessed; however, this increase has not resulted in corresponding increase in revenue due to that fact that for the purposes of sales tax the value of sugar is not ad-valorem but specific that is Rs.60 per kg, which is considerably below the actual market price of the commodity.
To address this anomaly, sugar is proposed to be included in the Third Schedule to the Sales Tax Act so that tax is charged on actual retail price of the product.
This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism.
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Budget 2021/2022: Tax imposed on sales made through online marketplace
ISLAMABAD: The domestic sellers on online platforms like Amazon and Daraz have been brought into tax net, Finance Minister Shaukat Tarin announced this while presenting budget 2021/2022 on Friday.
“We have seen extraordinary sales through online marketplaces especially due to Covid-19 lockdowns.”
However, contribution made by these e-commerce digital platforms in national exchequer is negligible, he added.
Accordingly, it is proposed to bring third party sales made through established online marketplaces within the purview of sales tax.
Industry has rejected the proposal saying that this step is against e commerce policy.
It is new industry. This step would discourage development of online business in Pakistan, a small seller said.
This would badly effect development of online small businesses.
Females can sell goods from home, students and small businesses can sell goods from home as well.
They have been subjected to 17 percent sales tax without any input tax. New entrepreneurs nipped in the budding phase.
The small sellers have sought intervention of the prime minster to withdraw such announcement.
It is alleged that the decision to curb online business taken on the pressure of retail giants.
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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: Turnover up to Rs10 million not required for sales tax registration
ISLAMABAD: The government has facilitated small businesses and increased the threshold of turnover up to Rs10 million from Rs3 million and they will not be required to get sales tax registration.
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Budget 2021/2022: Consumers to get prizes on sales tax receipts
ISLAMABAD: Finance Minister Shaukat Tarin on Friday said that the government will incentivize consumers through a system of prizes on sales tax receipts through an open ballot every month.
The finance minister while presenting the federal budget 2021/2022 on the floor of the house said that a special cell in FBR had been established comprising experienced retail business experts together with a smart complement of young officers who would be engaged in rolling out this plan and ensure its efficient operations.
The finance minister said that Pakistan Single Window shall be piloted with the view to operationalise it in the near future. This will bring all activities connected with the clearance of imports and exports on a single portal which would lead to significant reduction in the number of days required for cargo clearance.
The work on harmonisation of sales tax on services with the provinces is moving apace and would be made fully operational during the year.
The finance minister said that the system of tax would be simplified through introduction of new simplified tax return forms and new tax code and rules.
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Budget 2021/2022: salient features of budget measures in sales tax regime
ISLAMABAD: The federal government on Friday presented budget 2021/2022 and announced following budgetary measures pertaining to Sales Tax:
REVENUE MEASURES
1. The sale of goods through online market place is proposed to be brought into the sales tax net by deeming the online market place as supplier in respect of third party sales through their platform.
2. For specified goods, it is proposed that it may be made mandatory for manufacturers of such goods to obtain brand license for each separate brand or SKU.
3. Section 56C provides for prize scheme to promote tax culture. To ensure that the said incentive is not misused, a new sub-section is proposed to be inserted to provide for randomize “mystery shopping”.
4. The rate of sales tax on potassium chlorate is proposed to be increased from Rs. 80 per kg to Rs. 90 per kg in addition to 17% standard rate.
5. Zero-rating is proposed to be withdrawn from Petroleum Crude Oil, parts/components of zero-rated plant and machinery, import of plant and machinery by petroleum and gas sector and supply, repair and maintenance of ships.
6. Sixth Schedule is proposed to be streamlined and exemptions other than relating to basic food items, health and education are proposed to be withdrawn.
7. Eighth Schedule is proposed to be streamlined and reduced rates other than relating to basic food items, health and education are proposed to be brought into standard regime.
8. Reclaimed lead and used lead batteries is an unorganized sector. Therefore, entire amount of sales tax in respect of sales of such goods is proposed to be withheld at source under Eleventh Schedule.
9. To ensure collection of due taxes, sales tax on sugar is proposed to be levied on retail price by including the said product in Third Schedule.
RELIEF MEASURES
10. The minimum annual threshold of turnover from all supplies for cottage industry is proposed to be increased from Rs. 3 million to Rs. 10 million.
11. The threshold of shop area in case of furniture outlet/showrooms is proposed to be increased from 1000 square feet to 2000 square feet for inclusion in tier-1 retailer.
12. Public limited companies are proposed to be excluded from the purview of section 8B.
13. A separate section introduced for allowing extension of time for furnishing of return.
14. Exemption is proposed to be granted to art and printing paper for publication and printing of Holy Quran.
15. Exemption on import of CKD kits for electric vehicles by manufacturers granted by Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.
16. To facilitate international athletes, exemption to goods temporarily imported by athletes/sportsmen granted by Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.
17. Tax exemption to auto disable syringes granted vide Tax Laws (Second Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.
18. To encourage IT industry in the country, import of plant, machinery and raw material by Special Technology Zone is proposed to be exempted from sales tax.
19. To facilitate farmers and encourage storage of grain, tax exemption on locally manufactured silos is proposed to be granted till 30.06.2026.
20. Reduced rate of sales tax @ 1% on locally supply of electric vehicles granted vide Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Sixth Schedule.
21. In order to address litigation issue, fixed tax on SIM cards is proposed to be deleted with effect from 1st July, 2020.
22. Exemption from value addition tax on import of electric vehicles, CKD kits for small car, 2-3 wheelers, HCVs and all these vehicles in CBU conditions was granted vide Tax Laws (Amendment) Ordinance, 2021 is proposed to be incorporated in the Twelfth Schedule.
23. For facilitation purpose, the concept of constructive payment is proposed to be introduced in section 73.
24. To provide relief to the registered persons, the benefit of compensation for delayed payment of refund is also proposed to be extended to those persons in whose case order under section 66 is passed.
25. For promoting ease of doing business, the concept of Common Identifier Number is proposed to be introduced.
26. For establishment of Border Sustenance Markets, exemption from sales tax is proposed to be granted on food related and other consumable goods.
27. In order to introduce umbrella Export Facilitation Scheme by Customs Wing, exemption on import and zero-rating on local supplies in respect of raw materials, components, parts and plant and machinery to authorized exporters is proposed.
28. Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly it is proposed that small cars upto engine capacity of 850cc may be exempted from value added tax besides reducing sales tax rate from 17% to 12.5%.