GST on nearly 100 raw materials to be reduced

RECORDER REPORT

ISLAMABAD: The federal government has decided to reduce the higher rate of 20-22 percent sales tax on nearly 100 raw materials and inputs to standard rate of 16 percent in budget (2012-13).  

Sources told Business Recorder here on Wednesday that it is the major relief to be announced for the business and trade on budget day i.e. Friday (June 1, 2012). The higher rates of sales tax of 19.5 percent, 20 percent and 22 percent have been imposed at import stage for certain sectors/goods. Sales tax collected at import stage on account of higher rates is subsequently adjusted/refunded without any revenue gain. It is, therefore, proposed that the higher rate of sales tax 22% and 19.5% at import stage may be replaced with the standard rate of 16 percent.

In this connection, the government is planning to introduce amendments in the SRO644(I)/2007 to reduce higher rate of 20-22 percent sales tax on nearly 100 raw materials and inputs in budget (2012-13). SRO644(I)/2007 had imposed higher rates of sales tax on certain inputs. The FBR has proposed 16 percent sales tax on the higher rates of sales tax of 20-22 percent on the import of items mentioned in the SRO644(I)/2007. The amendment to SRO644(I)/2007 would provide a big relief to the manufactures and industrial units from next fiscal year. Resultantly, the higher rate of 20 percent and 17 percent as per SRO644(I)/2007 would be reduced in coming budget. Around 70 raw materials attracting higher rate of 20 percent sales tax and around 10 items having sales tax rate of 17.5 percent may benefit from lower rate of sales tax under proposed amendments to the SRO644(I)/2007 at the import stage and local supplies, they added.