GST assessment: FBR withdraws fixation of sugar price at Rs60/kg

09 Jul, 2021

ISLAMABAD: The Federal Board of Revenue (FBR) has withdrawn the fixation of the domestic price of sugar at Rs60 per kg, which is considerably below the actual market price of the commodity for sales tax assessment.

The FBR has rescinded notification dealing with the fixation of value of sugar for the assessment of sales tax at the domestic and import stages.

In this regard, the FBR has rescinded SRO 812(I)/2016 through an SRO 895(1)/2021 issued here on Thursday.

According to the FBR, currently, the price of white crystalline sugar is fixed at Rs60 per kg in terms of SRO 812(l)/2016, dated 02.09.2016, which is considerably below the actual market price of the commodity.

In order to address this anomaly, sugar is proposed to be included in Third Schedule to the Sales Tax Act, so that sales tax is charged and collected on actual retail price of the product at the manufacturing stage.

This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism in place for sugar, the FBR added.

According to the notification, in exercise of the powers conferred by the first proviso to clause (46) of section 2 of the Sales Tax Act, 1990, the FBR is pleased to rescind its notification no SRO 812(1)/2016, dated the 2nd September 2016.

Under rescinded SRO 812(I)/2016, the FBR had fixed value of domestically produced and imported sugar from September 2, 2016.

The value of domestically produced sugar was fixed at Rs60 per kg and the value of imported sugar was fixed at $725 per metric tons.

The FBR has abolished this fixed value of $725 per MT on the import of the commodity as well as domestic stage.

When asked, the Pakistan Sugar Mills Association (PSMA) Chairman, Sikandar Khan, to explain why the SRO 812(I)/2016 has been rescinded by the FBR, he said that now the SRO has no relevance.

He claimed that in the past, the FBR collected nearly Rs20 billion from sugar mills by fixing price of sugar at Rs60 per kg through SRO 812(I)/2016 as compared to actual price of Rs45-50 per kg at that time.

A tax expert stated that the values of sugar were fixed on import and domestic stages during 2016 for the purpose of assessment of sales tax.

When the fixed value of $725 per MT has been withdrawn, the sales tax would be charged on the actual value of the imported sugar.

Copyright Business Recorder, 2021

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