ISLAMABAD: There is immense pressure on the Federal Board of Revenue (FBR) to reinstate the sales tax exemption on imported sewing machines and bicycles.
Sources said company registrar here on Thursday that the Ministry of Industries and Production pleaded a genuine demand from local industries to reinstate the sales tax exemption on bicycles, sewing machines and similar items now subject to the standard rate of sales tax sale.
According to the sources, the FBR has been approached for the protection of domestic industries and sectors by reinstating the sales tax exemption on the import of sewing machines and imported bicycles.
Under the Finance (Supplementary) Act 2022 a number of exemptions from Table 1 of the Sixth Schedule to the Sales Tax Act 1990 have been removed.
Goods on which GST at the standard rate has been imposed can broadly be classified as imported/branded foodstuffs or plant and machinery and industrial inputs.
Imported live animals/poultry, imported raw meat/poultry, imported eggs, imported seeds, and various types of agricultural equipment, plant and field industry machinery are some of the items that are now integrated at the standard diet.
Thanks to a new insertion in table 2 of the sixth annex, the local supply of food products such as cereals, meat, poultry, vegetables, fruits, eggs, etc., has been exempted from the levy of sales tax. Similarly, supplies of locally produced laptop computers and newspapers are also exempt.
An exemption for the local supply of sugar cane has also been provided for. On the other hand, some of the existing exemptions available in Table 2 have been removed on raw cotton, whey and sausages (sold other than in retail packaging), matchboxes among others.
Exemptions for various plants, machinery and equipment, often involving huge tax expenditures, are available in Table 3 of the Sixth Schedule.
The FBR stated that the Eighth Schedule of the Sales Tax Act 1990 provided rates lower than the standard GST rate and that prior to the Finance (Supplementary) Act 2022 a wide range of rates ranging from 1 % to 16.9% were available under said appendix.
Differential rates were difficult to administer and susceptible to misuse. The eighth schedule has now been simplified and a number of reduced rates and preferential regimes have been removed, bringing these goods under the normal regime.
Copyright Business Recorder, 2022