Zero-rated ST regime: tax expert issues 'Highlights'
The Federal Board of Revenue (FBR) will collect 5 percent sales tax, along with one percent sales tax on value-addition, on the import of finished goods under SRO 1125(I)/2011. Arshad Shehzad, a leading sales tax expert of Karachi, on Monday issued highlights of SRO 1125(I)/2011 dated December 31, 2011. The highlights explain the key decisions of the new sales tax zero-rating regime from January 1, 2012.
Copyright Business Recorder, 2012
Following are the highlights of SRO 1125(I)/2011:
1. Single rate of 5 percent, instead of earlier two different rates--4 percent and 6 percent.
2. Import by commercial importer @ 2 percent along with 1 percent value-addition /tax.
3. Adjustment of input allowed with output.
4. Simplification in procedure.
5. Sales for reduced rate import to other than five sectors were allowed @ 5 percent. Earlier, it applied standard rate ie 16 percent.
6. Import of industrial input by manufacturer of five sectors would remain zero-rated.
7. Import of finished goods would attract 5 percent sales tax along with 1percent value addition tax.
8. Retailer would attract 5 percent sales tax on purchase of these goods with the facility of adjustment & not liable to pay turnover tax under special procedure. However, they have to pay turnover tax on sales of items other than listed in notification, Arshad said.