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New tax concessions await final nod

New tax concessions await final nod

ISLAMABAD: Federal Board of Revenue (FBR) is going to get approved newly-drafted Statutory Regulatory Orders (SROs) by Finance Minister Ishaq Dar for new tax concessions and reduction in tax rates.

The sources said that FBR drafted the SROs after endorsement of Karachi-based business community and Ministry of Finance. However, FBR will issue the required notifications after getting final nod from Finance Minister Ishaq Dar on his return from the United States, the sources said, adding that the Board has moved a summary to the Ministry seeking approval.

Sources explained that the newly-drafted SROs would allow refunds against local supplies under SRO.1125(I)/2011 and impose 2 per cent extra tax on retail price items and reduce withholding sales tax rate on purchases from unregistered persons from 17 to 1pc.

Through SROs, the rate of withholding sales tax on purchases from unregistered persons would be reduced from 17 to 1 per cent, which will not be adjustable. Items added in the Third Schedule to the Sales Tax Act 1990 vide Finance Bill 2013 (except for fertiliser and cement) would be omitted from the Third Schedule and subjected to 2 per cent extra tax in lieu of sales tax at retail stage. Under the draft notifications, the items chargeable to sales tax on retail prices would be exempted from sales tax withholding regime, rate of withholding for wholesalers, dealers (including petroleum dealers) and distributors is being reduced from current level of one-fifth (i.e. 3.4 per cent) to one-tenth (i.e. 1.7 per cent) of the applicable rate of sales tax and commercial importers who are subject to withholding on income tax have been excluded from sales tax withholding regime. The restriction imposed under (x) of SRO 1125(I)/2011 dated 2011 on refunds against local supplies would be done away with to allow refunds (after pre-refund scrutiny) as admissible under the relevant law and rate of withholding tax on goods transport vehicles under Section 234 of the Income Tax Ordinance, 2001 would be reduced from Rs 5 per kg of the laden weight to Rs 3 per kg, the condition of provision of Computerised National Identity Card number (CNIC), National Tax Number (NTN) and addresses of retailers under section 236H to be provided in the withholding statement under Section 165 of the Income Tax Ordinance, 2001 would be waived and sales tax on fabrics has been reduced from 5 to 3 per cent.