ISLAMABAD: The Federal Board of Revenue (FBR) has taken notice of the delay in issuance of sales tax notification on petroleum products every month and proposed changes in the approvals required for issuance of such statutory regulatory order (SRO).
Sources told Business Recorder here on Saturday that the FBR has moved a summary to the cabinet in this regard. The purpose of the whole exercise is to timely issue notification of sales tax rates on POL products every month.
Presently, the FBR issues notification after at least 4-5 days of the issuance of the new petroleum prices fortnightly. So far, the FBR has yet not issued the notification on the sales tax rates on POL products for the month of November 2021.
The FBR has moved a summary to the cabinet on the reduction in the sales tax rates on the POL products. The rate of GST on petrol has been proposed to be reduced from 6.84 percent to 1.43 percent or 5.41 percentage points reduction and on HSD the rate would be reduced by 3.53 percentage points or from 10.32 percent to 6.79 percent.
Effective Nov 5: POL products' prices raised by adjusting PL, GST
Following the approval of cabinet through circulation, the FBR will issue a notification with effect from November 5, sources said.
According to sources, the pricing mechanism of petroleum products is usually fortnightly, depending on the government's decision. In this connection, the Finance Division moves a summary for the prime minister's approval to adjust the petroleum prices. For provision of relief to the consumers and to ensure stability in pricing, sometimes changes are made in the sales tax rates in the pricing summary.
Once the summary gets approved, the new petroleum prices are notified with immediate effect by the Finance Ministry. The process of corresponding change in sales tax rates provided in the new pricing structure is initiated after the prices are approved by the prime minister.
To make any changes in the sales tax rates, the federal cabinet is the competent authority to approve the change. The Revenue Division submits a summary to the Cabinet Division for its approval. The Cabinet Division solicits approval of the Cabinet by circulation of the summary and conveys the decision of the federal cabinet to the Revenue Division.
This process normally takes two to three days, which eventually delays the issuance of notification for revision in sales tax rates on the petroleum products.
The Oil Companies Advisory Council (OCAC) has also raised this issue, which results in delayed invoicing and de-bonding of petroleum products and non-acceptance of Goods Declarations of Oil Marketing Companies.
Therefore, the FBR has proposed changes in the procedure and delegation of cabinet powers to the prime minister specifically for granting approval for making changes in the sales tax rates on petroleum prices, they added.
Copyright Business Recorder, 2021