Electricity bills: sales tax zero-rated units exempted from 10 percent WHT

The Federal Board of Revenue (FBR) has exempted 10 percent withholding tax (WHT) on electricity bills received by all sales tax zero-rated units of textile products, carpets, leather and articles thereof including artificial leather footwear, surgical goods and sports goods.
The WHT exemption would be applicable in cases where the units are registered as exporters or manufacturers of five sales tax zero-rated items. The board has amended Second Schedule of the Income Tax Ordinance 2001 through an SRO.1055(I)/2008 issued on Friday.
According to the notification, the provisions of the section 235 of the Ordinance 2001 shall not be applicable to the taxpayers who fall under the zero-rated regime of sales tax and registered with sales tax as exporters or manufacturer of carpets; leather articles; footwear; surgical goods; sports goods and textile products.
It is important to mention that the board had suspended implementation of its circular No 10 of 2008 through an income tax circular 12 of 2008. According to Circular 12, the board's Circular No 10 of August 27, 2008, on the matter of "definition of manufacturers-cum-exporters" has been held in abeyance till further orders.
FBR has issued a definition of the manufacturers-cum-exporters, who would be eligible for availing WHT exemption. Through Circular 10 of 2008, exemption from withholding tax was available to the "manufacturer-cum-exporter" from the provisions of section 235 of the Income Tax Ordinance, 2001, where the electricity bill exceeds Rs 20,000 per month. The board had clarified that the term "manufacturer-cum-exporter" means a person whose exports for the preceding tax year constitute 80 percent or more of the goods manufactured by him.