Supply of electricity to ginneries: FBR refuses to grant ST zero-rating facility

The Federal Board of Revenue (FBR) has refused to grant sales tax zero-rating facility on supply of electricity to units engaged in ginning activity since it does not fall within the ambit of SRO 1125(I)/2011. According to sources, FBR has referred to the Regional Tax Office (RTO) Peshawar''s letter on the request of M/s Hilal Cotton Waste Industry, Swabi for grant of zero rating facility on supply of electricity. The issue has been examined in the Board.
By virtue of clause (a) of S.No (ii) of conditions prescribed in SRO 1125(I)/2011 dated 31.12.2011, which states that the said notification shall apply from "spinning stage onwards, in case of textile sector and the manufacturing activity of cotton waste recycling/ carding waste, as reported by the RTO in the verification report in respect of the said unit, falls out of the purview of the said SRO. Therefore, registered persons operating in this sector cannot avail zero rating facility on supply of electricity, FBR added.