Input goods for finished items: EFS users required to pay GST on supply: FBR

ISLAMABAD: Manufacturers-cum-exporters (users) of “Export Facilitation Scheme” (EFS) would now be required to pay sales tax on procurement of local input goods to be used in the finished products.

The FBR has amended the Customs Rules through an SRO.1042(I)/2024 here on Thursday.

Under the EFS, a user shall be entitled to acquire input goods without payment of customs duty, federal excise duty, sales tax, or withholding tax as per his authorization, all such acquisitions shall be retained in the manufacturing facility or premises of the user declared under these rules.

Scope of EFC curtailed

The input goods may be imported free of duty and taxes on filing of a Goods Declaration giving number of the authorization granted. The procurement of local input goods shall be allowed on payment of leviable sales tax, FBR added.

Previously, the local input goods liable to sales tax shall be supplied against a zero-rated invoice. The law has been abolished and replaced with payment of sales tax on procurement of local input goods.

Through revised rules, the FBR has ALSO expanded the scope of “Export Facilitation Scheme” (EFS) to allow manufacturers-cum-exporters to import certain textile inputs against allocated quota.

According to the revised rules, the FBR has introduced amendments in the Export Facilitation Scheme“.

Under the amended scheme, the tags and printed materials supplied by a foreign supplier without the involvement of foreign exchange from Pakistan shall be allowed to be imported without any quantitative restriction.

The buttons, belts, pads, velcro tapes, hangers, special labels, price labels, tags, special buttons, push buttons, rivets, eyelets, buckles, special brand tags, zippers, locker loops, unit soles with heels, soles, heels, valves and bladders for footballs, textile designs, artwork transparencies, polypropylene woven and jute bags imported for use in readymade garments, foundation garments, textile made-ups, footwear etc. where there is no wastage generated during manufacturing for exports shall be allowed to be imported against quota and input-output ratio declared by the EFS user.

This is subject to approval and verification by the Regulatory Collectorate without referring the case to IOCO or Engineering Development Board (EDB) as the case may be, the FBR added.

Copyright Business Recorder, 2024