ISLAMABAD: There is no change in sales tax regime of locally manufactured mobile phones and imported mobile phones valuing less than US 200 dollars which shall be continued to be chargeable under the Sales Tax Act.
The FBR on Tuesday issued circular 1 of 2023 to explain important amendments introduced in Sales Tax Act, 1990 (STA) and Federal Excise Act, 2005 (FEA) through Finance (Supplementary) Act, 2023.
The FBR stated that in the Eighth Schedule, S.No 47 and 56 of Table-1 has been aligned with the increase in the standard rate of sales tax. Similarly, imported cellular/mobile phones (CBU) valuing $ 200 and above were chargeable to 17% under Table-2 of the Ninth Schedule.
The Schedule ibid has now been rationalised in line with the enhancement in standard rate of sales tax and the considered decision to introduce special rate of 25% for certain luxury goods.
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It is pertinent to point out that there is no change in sales tax regime of locally manufactured mobile phones and imported mobile phones valuing less than $ 200 which shall be continued to be chargeable as per the relevant provision of Table-2 of the Ninth Schedule, the FBR added.
The FBR has imposed 10 percent federal excise duty on sugary fruit juices, syrups and squashes, waters whether or not containing added sugar or artificial sweeteners excluding mineral and aerated water.
The rate of federal excise duty on all types of aerated water has been increased from 13% to 20%, the FBR said. In order to reduce fiscal gap and increase tax to GDP ratio, the standard rate of sales tax has been increased from 17% to 18%.
In line with the provision of Section 3(2)(b) of STA, the federal government has been empowered to enhance the rate of sales tax in respect of goods falling in purview of the Third Schedule, through insertion of a new proviso in clause (a) of sub-section (2) of section 3 of the Sales Tax Act 1990.
The rate of federal excise duty on cigarettes under S.No 9 and 10 of Table-1 of the First Schedule to the FEA has been increased through Finance (Supplementary) Act, 2023. The threshold of minimum price has also been enhanced by means of amendment in “Restriction-3-Minimum Price.” Furthermore, in order to secure revenue and ensure that no cigarette brands become liable to lesser FED as a result of changes in the price threshold, a new condition “Rate of Duty” has been added after the Table-1 in First Schedule to FEA.
The rate of FED on cement was Rs 2 per kg which was reduced to Rs 1.50 per kg as part of the relief measure in the wake of Covid-19 pandemic through Finance Act, 2020. In order to bring at par with the rate prevailing prior to lst July, 2020, the rate of FED on cement has been increased to Rs 2 per kg, the FBR added.
Copyright Business Recorder, 2023
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