Thursday, 24 May 2012 10:16
ISLAMABAD: The government has decided to abolish federal excise duty (FED) on 5-6 different kinds of oils in budget (2012-13), reducing the total number of excisable commodities from 21 to 16 next fiscal year onwards.
Sources told Business Recorder here on Wednesday that the FED would be totally abolished on five different kinds of oils covering lubricating oil in packs; Base Lube Oil, lubricating oil manufactured from reclaimed oil or sludge or sediment, lubricating oil in bulk, lubricating oil manufactured from sludge and lubricating oil manufactured from sediment. The proposed withdrawal of excise duty on various kinds of oils would cause revenue loss to the tune of billions. However, abolition of duty would provide a major relief to the business community as well as general masses in budget.
In this connection, the Finance Bill (2012-13) is expected to propose amendment in the Table-I (excisable goods) of the First Schedule of the Federal Excise Act 2005 to reduce the number of excisable commodities in the coming budget. Except these 5-6 kinds of oils, the excise duty would be retained in the remaining items mentioned in the Table-I of the First Schedule of the Federal Excise Act, 2005.
According to sources, at present the FED is applicable on the lubricating oil in packs not exceeding 10 liters; lubricating oil in packs exceeding 10 liters and lubricating oil manufactured from reclaimed oils or sludge or sediment. This is subject to the condition if sold in retail packing or under brand names the words manufactured from reclaimed oil or sludge or sediment should be clearly printed on the pack. The proposed amendment in the Table-I of the First Schedule of the Federal Excise Act 2005 would remove these kinds of oil from the FED regime in budget (2012-13).
In budget (2011-12), the excise duty was abolished on solvent oil, other fuel oil, mineral greases, transformer oil, other mineral oils excluding sewing machine oil, waste oil, carbon black oil (carbon black feed stock) including residue carbon oil, methyl tertiary butyle ether (MBTE), greases, organic composite solvents and thinners, viscose staple fibre, motor cars and other motor vehicles. The policy of abolition of the FED on oils would continue in coming budget (2012-2013). Keeping in view this policy, the FED on the remaining oils would be abolished from next fiscal.
Under the government plan to phase-out the FED regime, out of 46 items subjected to the FED, the FBR had abolished the FED on 15 items in last budget. In budget (2012-13), the number of items would be further reduced from 31 items to 16. The gradual phasing out of the excise duty would continue in the next two budgets for complete abolition of the excise regime in future.
Sources added that the government would also gradually phase out Federal Excise Duty (FED) on cement and beverages sectors in the next budget (2012-13) in line with its commitment to the two sectors in fiscal year 2011-12. In the last budget, the FED on beverages was reduced from 12 percent to 6 percent with the commitment that the remaining 6 percent would be abolished in 2012-13. Similarly, the government had reduced the FED on cement from Rs 700 per metric ton to Rs 500 per metric ton.