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Govt likely to slap 17pc ST on non-export-oriented sectors

Govt likely to slap 17pc ST on non-export-oriented sectors

ISLAMABAD: The government is likely to charge a standard rate of 17 percent sales tax on the import of items by non-export-oriented sectors, and replace sales tax zero-rating on local supply of over 20 items, including finished dairy products and stationery goods, with sales tax exemption in budget (2014-15).

As per details, the FBR has proposed a policy change for the dairy sector and stationery industry to the Ministry of Finance in coming budget (2014-15).

The tax authorities have floated the proposal to check unnecessary accumulation of sales tax refunds in zero-rated sectors. The policymakers have yet to take a final decision on the budgetary proposal of the FBR. In case of non-export-oriented sectors, it has been proposed to charge 17 percent sales tax at the import stage whereas sales tax zero-rating on domestic supply of dairy products and stationery items have been proposed to be replaced with the sales tax exemption. In case proposal has been incorporated in budgetary measures for 2014-15, it would require amendments to SRO 670 (I)/2013.

If the proposal has been accepted, imports made by non-export-oriented sectors would be subjected to 17 percent sales tax from 2014-15. Sales tax zero-rating on local supplies has been proposed to be replaced with sales tax exemption on colours in sets, writing, drawing and marking inks, erasers, exercise books, pencils, sharpener, geometry boxes, pens, ball pens, markers and porous tipped pens, pencils including colour pencils, milk including flavoured milk, yogurt, cheese, butter, cream, desi ghee, whey, milk and cream, concentrated and added sugar or other sweetening matter; preparations for infant use put up for retail sale and fat filled milk.

Under SRO 670(I)/2013, the import and supply of goods and the raw materials, packing materials, sub-components, components, sub-assemblies and assemblies imported or purchased locally for the manufacture of the dairy and stationary goods shall be charged to sales tax at the rate of zero percent subject to the conditions.

The zero-rating under this notification shall be available subject to determination of input/output ratios by the Input-Output Co-efficient Organisation (hereinafter referred to as “IOCO”), if not already determined under an earlier concessionary notification issued for such goods. Provided that this condition shall not be applicable in case of import of finished goods and their supply in same state. For import and local procurement of raw materials, packing materials, subcomponents, components, sub-assemblies and assemblies for the manufacture of the goods, the laid down conditions and procedures shall be followed, the notification added.