The Federal Board of Revenue (FBR) will request power distribution companies to grant extension up to June 30, 2020 to zero-rated units of five export sectors for continuation of benefit of concessionary power tariff to the companies of erstwhile zero-rated sectors.
Sources told Business Recorder here on Monday, that the FBR has received a letter (dated May 11, 2020) of the Textile Division on the extension in zero-rating certificates till June 30, 2020. The zero-rating certificates have expired on March 31, 2020.
According to the details, the FBR declared five sectors namely, textiles, leather, carpet, surgical and sports goods as zero-rated under the SRO 1125, on which the sales tax was charged at zero-rate or as the case may be.
Further, the supply of electricity and gas to the registered manufacturers or exporters of five zero-rated sectors, was charged sales tax at the rate of zero percentage in the manner specified by the FBR.
The FBR in order to provide zero-rating on supply of electricity and gas to the registered manufacturers and exporters of five sectors issued Sales Tax General Order, 117, of 2015. The government has provided concessionary rates of US cents 7.5/kwh, RLNG at $6.5/mmbtu and gas at Rs786/mmbtu.
The facility was provided to registered manufacturers and exporters of these five zero-rated sectors with the FBR. The government in current financial budget that is 2019-2020, has rescinded SRO 1125, under which the zero-rating has been withdrawn for five sectors namely textiles, leather, carpet, surgical and sports goods.
The erstwhile five zero-rated sectors that are textiles including jute, leather, carpet, surgical and sports good were given the nomenclature of export-oriented sectors by the Ministry of Commerce after approval of the ECC of the Cabinet on December 13, 2019, and decision was forwarded to all ministries concerned to issue the necessary legislative Instruments.
The ministries concerned are yet to issue any legislative Instruments. The Ministry of Commerce plans holding an inter-ministerial meeting at the ministers' level to decide on the procedure, and then subsequent approvals.
However, this would take some time.
It has also been informed by a textile association that a clarification for zero rating status has been issued by the commissioner IR, Faisalabad to FESCO till June 30th, 2020.
It is requested that all those zero-rated companies who were earlier given zero-rated certificate till March 31st, 2020 may please be extended to June 30, 2020 after following the codal formalities for extension (if any), the Textile Wing added.
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