Unregistered retailers: FBR waives off CNIC-NTN condition The Federal Board of Revenue Friday introduced an anti-documentation measure by waiving off the condition of seeking CNICs, NTNs and addresses of unregistered retailers, reduced withholding sales tax rate on purchases from unregistered persons from 17 to 1 percent, 2 percent extra sales tax on over 50 items and charge 3 percent sales tax on import and supply of fabrics. In this regard, the FBR has issued five notifications here on Friday. Through SRO.896(I)/2013, the FBR has omitted over 50 items from the Third Schedule of the Sales Tax Act, 1990, and in lieu imposed a 2 percent additional tax on these items to be paid by manufacturers. The rate of 2 percent was also worked out on the basis of actual value addition of these sectors from the manufacturers till retail stage. Thus, the FBR will now charge 2 percent extra tax from manufacturers of over 50 items in lieu of the tax payable by the subsequent or entire supply chain. The manufactures of these items would now pay 17 percent existing sales tax and 2 percent extra sales tax in lieu of the tax payable by the subsequent supply chain. The remaining supply chain of these items would not be required to pay any additional sales tax. In lieu of printed retail price mechanism, the Board would charge this extra 2 percent tax on household electrical goods, household gas appliances, foams or spring mattress and other form products for household use, auto parts and accessories, lubricating oils, oil additives, brake fluid and transmission fluids and maintenance products, tyres and tubes, storage batteries, arms and ammunition, paints, distempers, enamels, pigments, colours, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing, tiles, biscuits, confectionary, chocolates, toffees and candies. According to the FBR, the Board has not imposed any new tax on household gas and electrical appliances, tiles, tyres etc. This is, therefore, not a new tax or enhancement of existing rate but only collection of tax which even otherwise was payable by the supply chain, Board added. Under SRO.898(I)/2013, import and supplies of fabric shall be charged to sales tax at the rate of 3 percent. The commercial importers would pay 2 percent value addition tax and 3 percent sales tax ie 5 percent sales tax shall be chargeable on commercial imports of fabrics. The FBR has also allowed refund against local supplies, if any, shall be admissible only subject to pre-refund audit and in case of value addition of less than ten percent subject to the condition that the registered persons furnishes a revolving bank guarantee valid for at least ninety days issued by a scheduled bank to the satisfaction of the Commission, Inland Revenue having jurisdiction, of an amount not less than the average monthly refund claim during last twelve months. Provided further that the post-refund audit shall be conducted and finalised within a period of ninety days and certificate to the genuineness of the refund claim shall be issued for each and every claim by the Commission, Inland Revenue having jurisdiction, notification added. Sources said that the rate of withholding for wholesalers, dealers (including petroleum dealers) and distributors is reduced from current level of one-fifth (ie 3.4 percent) to one-tenth (ie 1.7 percent) 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. As per SRO.897(I)/2013, a withholding agent shall deduct an amount equal to one-tenth of the total sales tax shown on the sales tax invoice issued by persons registered as a wholesaler, dealer (including petroleum dealers) or distributor, and make the payment of the balance amount to him. The withholding agent having Free Tax Number (FTN), ie, government departments shall, on purchase of taxable goods from persons liable to be registered but not actually registered under Chapter 1 of the Sales Tax Rules, 2006, deduct sales tax at the applicable rate of the value of taxable supplies made to him from the payment due to the supplier and, unless otherwise specified in the contract between the buyer and the supplier, the amount of sales tax for the purpose of this rule shall be worked out on the basis of gross value of taxable supply. Other withholding agents shall on purchase of taxable goods from persons liable to be registered but not actually registered under Chapter 1 of the Sales Tax Rules, 2006 deduct sales tax at the rate of one percent of the value of taxable supplies made to him from the payment due to the supplier and the amount of sales tax for the purpose of this rule shall be worked out on the basis of gross value of taxable supply. Provided that the withholding agent shall not be entitled to reclaim or deduct the amount of tax withheld from such persons as input tax. Through another SRO, sources said that the rate of withholding tax on goods transport vehicles under Section 234 of the Income Tax Ordinance 2001 has been reduced from Rs 5.00 per kg of the laden weight to Rs 3.00 per kg. The rate of tax as specified in clause (i) of Division III of Part IV of the First Schedule shall be reduced to Rs 3 per kilogram of the laden weight, in the case of goods transport vehicles, other than oil tankers. Moreover, the provisions of clause (a) of section 165, shall not apply in case of manufacturer, distributor, dealer and wholesaler required to collect advance tax under sub section (1) of section 236H of the Income Tax Ordinance 2001.
Posted on: Mon, 07 Oct 2013 06:24:37 +0000
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