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FBR compiles list of undue ST exemptions

The Federal Board of Revenue (FBR) has proposed withdrawal of sales tax exemptions on the import of official vehicles by President, Prime Minister and Governors in the upcoming budget (2013-14). Sources told Business Recorder here on Saturday that the FBR has compiled a list of ''undue sales tax exemptions'' for withdrawal of the same in the budget (2013-14).

According the FBR''s proposal, the following sales tax exemptions may be withdrawn: Newsprint; milk preparations obtained by replacing one or more of the constituents of milk; exemption on import of official vehicle of President, Prime Minister and Governors; Hydrogen, Nitrogen and Helium supply to Pakistan PTA (Pure Terephathalic Acid) by BOC Pakistan Limited and exemption of equipment imported by members of Pakistan Film Producers Association.

The FBR has estimated to collect Rs 6 billion by withdrawing sales tax exemptions from the above mentioned items during 2013-14. It is one of the FBR''s budgetary proposals which are yet to be approved by the Ministry of Finance, sources said. The FBR has also proposed standard rate of 16 percent sales tax on the supplies against international tenders at import stage as well as on local supplies in budget (2013-14). The Board had substituted zero-rating with exemption on supplies against international tender enforced through Finance Act, 2012 vide deletion of Supplies against International Tender from Fifth Schedule and addition in Sixth Schedule of the Sales Tax Act, 1990, effective from the June 2, 2012.

These amendments were made in last budget (2012-13) to exempt supplies against international tenders. The FBR has proposed Ministry of Finance to withdraw the exemption granted to the supplies against international tenders. Following withdrawal of exemption, such supplies would be subject to 16 percent sales tax. The zero-rating on supplies against international tender was replaced with the exemption in an attempt to check inadmissible sales tax refund claims. Local supplies against international tenders have approached the FBR that they are unable to claim input tax adjustment due to exemption on such supplies. The persons engaged in local supplies of goods have argued that the domestic supplies as well as imported supplies be subjected to a uniform rate of 16 percent sales tax to end discrepancy, sources added.

Copyright Business Recorder, 2013


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