VIDE SROs 484(I)/2015, 485(I)/2015, 486(I)/2015, 489(I)/2015, 491(I)/2015, 492(I)/2015 and 494(I)/2015.
Naveed Zafar Ashfaq Jaffery & Co.
Chartered Accountants Prologue:
FBR has made significant amendments in Sales Tax Regime and has incorporated changes in following Statutes and/or Rules:
1. Sales Tax Act 1990 ("STA"),
2. Sales Tax Rules, 2006 ("STR")
3. Sales Tax Special Procedure Rules 2007 ("STSPR"),
4. Sales Tax Special Procedure (withholding) Rules ("STSPWR"), and;
5. SRO 1125(I)/2011 (SRO-1125)
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1. TITLE: SALES TAX SPECIAL PROCEDURE RULES, 2007
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NATURE: AMENDMENT, ADDITIONS
REFERENCE: RULES 54-58, 58F, 58H, 58Ha, 58I, 58K, 58RA, 58T, 58X
AMENDING SRO 484(I)/2015 DATED: 30-06-2015
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Historic Perspective:
STSPR were initially introduced vide SRO 484(I)/2004 dated: 12-06-2004. The Rules were later on amended through following SROs:
-SROs 522(I)/2005 dated: 06-06-2005;
-560(I)/2006 dated: 05-06-2006; and
-480(I)/2007 dated: 09-06-2007.
Amendment:
Through the above referred SRO, the Federal Government has made amendment as follows:
a. Zero rated supply of ginned cotton
Supply of ginned cotton was exempted through an amendment in SRO 551(I)/2008 vide SRO 220(I)/2013 dated: 19-03-2013. Later, the same was transferred and made part of sixth schedule, thereby, keeping the same exempt.
SRO 484 has now removed the rules with respect to zero rated supply of ginned cotton, as the same were not required due to exemption of ginned cotton.
b. Steel Melters, re-rollers and ship breakers
The application of the chapter has also been further refined to importers of iron and steel scrap falling under the PCT Headings 7204.3000, 7204.4100, 7204.4990 and 7204.4940. local suppliers of re-meltable iron and steel scrap have also been included in the chapter.
The rate of tax has also been increased from Rs 7 / unit of electricity consumed to Rs 9 / unit. Sales tax @ Rs 5,600/ metric ton, which was earlier adjustable, has now been made non-adjustable in case of import of waste and scrap of compressors falling under PCT Heading 7204.4940,however, further local supply of such import has been excluded from levy of sales tax.
Further, sales tax collected @ Rs 5,600 on import of scrap falling under PCT headings 7204.3000, 7204.4100 and 7204.4990 has been kept adjustable. Local supply of such import shall also be charged @ Rs 5,600 / metric ton.
Sales tax on ship breakers has also been increased from Rs 6,000 / metric ton to Rs 8,000 per metric ton. For steel melters and re-rollers operating on self generation basis, the rates of sales tax has been increased as follows: a. Mills producing electricity with the help of gas generators, from Rs 1,663 to Rs 2,138. b. Mills operating on self generated electricity, from Rs 45,458 to Rs 58,446 The amount of sales tax to be mentioned on invoices issued by various suppliers has also been revised as follows:
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Amount of sales Amount of sales
S. NO. Invoice issued by and for or to tax (New)/MT tax (old)/MT
(Rs) (Rs)
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By steel melters or composite units of
1 melting, re-rolling and MS cold drawing 8,047 6,447
to registered re-rollers
2 By steel re-rollers, using ingots or billets 9,217 7,357
of steel melters or compositeunits of
melting, re-rolling and MS cold drawing,
to registered persons
3 By re-rollers, using billets of Pakistan 8,092 8,092
Steel Mills or Peoples Steel Mills or
heavy Mechanical Complex or imprted
billets, to registered persons
4 By re-rollers, using shipplates and re- 9,170 7,610
rollable scrap as raw material, to
registered persons
5 By re-rollers, to unregistered persons 1,170 910
6 By persons supplying imported MS 8,256 8,256
products, to registered persons
7 By persons supplying imported MS 1,170 910
products, to unregistered persons.
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c. Payment for extra sales tax on specified goods
The wholesaler-cum-retailer operating under this chapter has been allowed to issue a sales tax invoice for the goods subject to extra tax under this chapter, if supplied to a registered person.
Earlier, specified goods subject to extra tax were exempt after import or manufacturing stage as per rule 58T of the Rules, consequently making retailers unable to issue sales tax invoices and claim input tax. The allow ability to issue sales tax has made retailers able to claim input against sale specified goods subject to extra tax too.
Moreover, where the wholesaler-cum-retailer receives consideration in cash against the supplies made by him, the provisions of section 73 of the Sales Tax Act, 1990 shall not affect the admissibility of input tax adjustment.
Further, it has been specified that the extra amount of sales tax shall be declared against relevant supplies instead of other supplies and shall be deposited without any adjustment against the same ie 'extra tax' shall be treated similarly as 'further tax' in the hands of supplier as the supplier will pay the extra tax to the exchequer without making it part of output tax.
The same will also not be adjustable in the hands of buyer as provided in section 8(1)(c) of the ACT.
d. Cottonseed oil expelled by oil mills
The sales tax has now been made payable and has been made liable to be collected at the time of supply. This shall have effect form 5th March, 2015.
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2. TITLE: SALES TAX SPECIAL PROCEDURE
(WITHHOLDING) RULES, 2007
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NATURE: AMENDMENT
REFERENCE: RULES 2, 5
AMENDING SRO 485(I)/2015 DATED: 30-06-2015
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Historic Perspective:
STSPWR were initially introduced vide SRO 660(I)/2007 dated: 30-06-2007. The Rules were later on amended through SROs:
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SRO 956(I)/2007 dated: 14-09-2007
SRO 77(I)/2008 dated: 23-01-2008
SRO 719(I)/2009 dated: 11-08-2007
SRO 704(I)/2009 dated: 30-07-2009
SRO 846(I)/2009 dated: 01-10-2009
SRO 98(I)/2013 dated: 14-02-2013
SRO 505(I)/2013 dated: 12-06-2013
SRO 897(I)/2013 dated: 04-10-2013
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Amendment:
Withholding agents as specified in the Rules are required to deduct sales tax equal to 1/5th of the amount of sales tax shown on invoices subject to certain exceptions.
Through the above referred SRO, the Federal Government has made amendment as follows:
-- Petroleum dealers, on invoices issued by them, have been excluded from the ambit of sales tax deduction by withholding agents.
> The dealers of motor spirit and high speed diesel have also been included in the list of registered suppliers to whom these Rules shall not apply.
-- The sales tax return cum payment challan; by the withholding agents other than Government Department; has been made liable to be filed by 15th day of the month following the month during which purchases have been made instead of the month in which payments have been made.
This means that the sale tax withholding regime has been changed from cash basis to accrual basis.
-- Earlier, suppliers of mild steel products were excluded from applicability of these Rules. Suppliers of mild steel products have now been replaced by the persons falling under chapter XI of Sales Tax Special Procedure Rules, 2007 ie Steel Melters, Re-rollers and Ship Breakers.
-- Suppliers of following products have been removed from the list of persons to whom these rules do not apply, making the rules applicable to them:
-- Products made from sheets of iron or non-steel alloy, stainless steel or other alloy steel, such as pipes, almirahs, trunks etc.
-- Paper, in rolls or sheets, and
-- Plastic products including pipes.
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3. TITLE: SALES TAX CHARGED AT ZERO
PERCENT ON SUPPLY/
IMPORT OF GOODS
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NATURE: AMENDMENT
REFERENCE: SRO 1125(I)/2011
AMENDING SRO 486(I)/2015 DATED: 30-06-2015
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Historic Perspective:
Certain goods were notified initially vide SRO 1125(I)/2011 dated: 31-12-2011 on which sales tax was charged at 0% or 5% wherever applicable. Multiple amendments have been made in the said SRO since then.
Amendment:
Through the above referred SRO, the Federal Government has made amendment as follows:
Table I
Maize (corn) starch has been removed from Table I of the said SRO. This has the effect that maize (corn) starch will no more be charged at reduced rate of 2% and the normal rate of 17% shall apply.
Table II Table II of said SRO have been replaced with a new table wherein the goods have been comprehensively specified along with conditions and rates applicable to them. Due to the replacement, Conditions no. (iii) to (ixa), which have become redundant, have been deleted.
Following is the comparison of rates of sales tax charged before and after the amendment:
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Rate of Rate of
S. Sales Tax- Sales Tax
No Description of Goods and Points of Taxation New -Old
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1. Goods usable as industrial inputs, specified
in Table I
i Import for in-house consumption by 3% 2%
registered manufacturers of the five sectors
ii Commercial imports 3% + 1% 2% + 2%
VA VA
iii Supplies to registered or unregistered 2% 3%
persons of the said five sectors
iv Supplies to persons outside the said five sectors 17% 17%
v Import by, or supply to, registered 3% 2%
manufacturers, whether or not of the said
five sectors, for the manufacture of goods
specified in Table-I or Table-II
2. Fabric, including grey fabric
i Import for in-house consumption by 3% 3%
registered manufacturers of the five sectors
ii Commercial imports 3% + 1% 3% + 2%
VA VA
iii Supplies 3% 3%
3. Processed goods, including fabrics
Processing of goods owned by other persons, by 3% 2%
I registered manufacturers of the five sectors
Locally manufactured finished articles of
4. (a) textiles and textile made-ups.
(b) leather and artificial leather
i Supplies to any person, including retail sales 5% 5%
6. Imported finished goods ready for use by the
general public
i Import 17% + 2% 5% + 2%
VA VA
ii Supply thereof 17% 17%
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4. TITLE: SERVICES ON WHICH EXCISE DUTY AS
TAX PAYABLE UNDER SALES TAX MODE
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NATURE: OMISSION
REFERENCE: 550(I0/2006 DATED: 05-06-2006
AMENDING SRO 489(I)/2015 DATED: 30-06-2015
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Historic Perspective:
Through SRO 489(I)/2006 dated: 05-06-2006, Excise Duty in Sales Tax mode (ie input adjustment is allowed) on following services was levied:
-Advertisement
-Facilities for travel
-Carriage of goods by air
-Shipping agents
-Telecommunication services
Amendment: Through the above referred SRO, the Federal Government has excluded services of 'Facilities for travel' and 'Carriage of goods by air' from FED in Sales Tax mode ie input tax adjustment shall not be allowed to recipient of such services.
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5. TITLE: FIXATION OF MINIMUM VALUE OF
TAXABLE SUPPLY OF COAL
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NATURE: AMENDMENT
REFERENCE: 532(I)/2008 DATED: 11-06-2008
AMENDING SRO: 491(I)/2015 DATED: 30-06-2015
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Historic Perspective:
The minimum value of taxable supply of locally produced coal was fixed at Rs 1,000 per ton.
Amendment:
Through the above referred SRO, the Federal Government has fixed the minimum value to be Rs 2,500 per ton.
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6. TITLE: PERSONS SPECIFIED TO BE EXCLUDED
FROM SECTION 8B OF STA
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NATURE: AMENDMENT
REFERENCE: SECTION 8B OF STA,
SRO 647(I)/2007, SRO 1125(I)/2011
AMENDING SRO: 492(I)/2015 DATED: 30-06-2015
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Historic Perspective:
Section 8b of the STA specifies that a registered person shall not be allowed to adjust input tax in excess of 90% of output tax for that tax period. Certain registered persons were excluded from this condition through SRO 647(I)/2007.
Amendment:
Through the above referred SRO, the Federal Government has also included persons making supplies at reduced rates under SRO 1125(I)/2011 in the list of SRO 647(I)/2007 as discussed above provided value of such supplies exceeds 50% of value of all taxable supplies in a tax period.
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6. TITLE: SALES TAX RULES, 2006
NATURE: AMENDMENT
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REFERENCE: RULES 2, 4, 5, 5A, 6-11, 12, 12A, 12B,
14, 26A, 33, 34, 36, 45-50, 57A, 57B,
150ZA-150ZQ
AMENDING SRO: 494(I)/2015 DATED: 30-06-2015
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