The Federal Board of Revenue (FBR) Friday directed field formations to ensure that the gas distribution companies properly charge and deposit the sales tax from CNG stations, according to budget instructions issued on Finance Act 2014. The FBR has directed the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) that the earlier Special Procedure for collection of sales tax from CNG stations through the gas bills, as well as sub-section (8) of section 3 inserted in 2013 were stuck down by the Supreme Court of Pakistan. Sales Tax (Amendment) Ordinance, 2014 was promulgated by the President of Pakistan to address the situation. These amendments have now been introduced through the Finance Act 2014. The RTOs/LTUs would ensure that CNG stations are registered and file quarterly returns, as prescribed in rule 20(2)(c) of the Sales Tax Special Procedure Rules, 2007. The concerned LTUs would also ensure that the gas distribution companies properly charge and deposit the sales tax from CNG stations, the FBR added. The FBR said that in order to promote industrialization, job creation and economic uplift of the less developed regions, exemption of sales tax has been allowed on the import of plant, machinery and equipment for setting up fruit processing and preservation units in Gilgit-Baltistan, Balochistan Province and Malakand Divisions. Sales tax exemption on the import of plant, machinery and equipment imported for setting up industries in FATA has also been allowed. Both these concessions are subject to the same conditions and procedure as are applicable for exemption from customs duty. Relevant entries have been added in the Sixth Schedule to the Sales Tax Act, 1990 for this purpose. In order to promote agriculture, exemption has been granted on import of High Efficiency Irrigation Equipment including submersible pumps, sprinklers and air release valves (PCT headings 8413.7010, 8424.8100, 8424.2010, 8481.1000, 8481.3000, 9026.2000 and 9032.8990) and Green House Farming Equipment (PCT headings 8430.3100, 8430.3900 and 9406.0010) for agriculture sector through inclusion in the Sixth Schedule to the Sales Tax Act, 1990. In order to promote farm mechanisation and the local tractor industry, sales tax on import and local supply of tractors has been reduced to 10% vide SRO 572(1)/2014 dated 26th June, 2014, FBR said. To facilitate the handicapped, import and supply of cochlear implants system (hearing aids - PCT heading 99.37) has been exempted through insertion in S. No 59 of Table I of the Sixth Schedule to the Sales Tax Act, 1990. The following two measures have been taken regarding Federal Excise Duty (FED) on telecommunication services, effective from 1st July, 2014: In order to avoid double levy, telecommunication services have been excluded from the purview of FED in the provinces where they have imposed and have started collecting provincial sales tax. Secondly, in the remaining areas, FED on telecommunication services has been reduced to 18.5 percent. Explaining the procedural amendments, FBRs budgetary instructions said that the supplies of electricity and gas to the five export-oriented sectors namely: textile, leather, carpet, sports and surgical goods are zero-rated by issuance of Sales Tax General Orders under section 4(d) of the Sales Tax Act, 1990. Since these sectors are now being charged to reduced rate of sales tax instead of zero-rating, in order to align the law, clause (d) of section 4 has been appropriately amended. Certain authorities have wrongly interpreted that the provisions of section 40B of the Sales Tax Act, 1990 (relating to posting of officers for monitoring of production, clearance and stocks) are dependent section 40 of the Sales Tax Act, 1990. An Explanation has been added in section 40B whereby it is clarified that the provisions of this section are independent from those of section 40, the FBR said. The FBR said that the edible oils were exempted from sales tax as they were made chargeable to Federal Excise Duty in sales tax mode. However, despite imposition of FED on crude palm oil (PCT heading 1500.), its PCT was not appearing in the Sixth Schedule, which was causing difficulty in the implementation of WeBOC on this item. This inadvertent omission has been corrected by inserting the PCT heading in the S. No 24 of Table I of the Sixth Schedule to the Sales Tax Act, 1990. Previously, in case of sales tax and FED chargeable on retail price, it was assessable on the highest such price for a particular brand or variety of goods. This created difficulty for certain category of goods such as cement, where retail prices are fixed for different zones/areas of the country, owing to various factors. To remove the difficulty arising in such cases, the relevant provisions of the Sales Tax Act, 1990 and Federal Excise Act, 2005 have been amended to allow the Board to for creation of zones for the purpose of charging sales tax and FED on the highest retail price of a particular brand or variety of goods in that zone, the FBRs budgetary instructions added.
Posted on: Sat, 05 Jul 2014 01:41:29 +0000
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