ISLAMABAD: The Federal Board of Revenue (FBR) here on Friday clarified that the government had not imposed any new tax on household gas and electrical appliances, tiles, tyres etc.
In a statement issued here it said that these goods were chargeable to sales tax on retail price basis.
The FBR further clarified that Sales Tax on retail price basis means that sales tax of the complete chain from manufacturer till retailer is paid upfront by the manufacturer.
"The business community approached FBR on grounds that this system has posed many practical problems for them and requested FBR to do away with charging sales tax on retail price basis and in its lieu agreed to pay 2 percent additional sales tax (worked out on the basis of actual value addition from manufacturer till retailer) on all these items. 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," the FBR clarified.
It said that the news item broadcast by certain news channels regarding imposition of 2 percent additional sales tax on household gas and electrical appliances, ceramic tiles, tyres, foam & mattresses, auto parts, confectionery items is based on
misinterpretation of SRO896(I)/2013 issued on October 4, 2013.
The FBR said that during Budget 2013, all these goods were added in the third Schedule to the Sales Tax Act, 1990 to charge sales tax on retail price basis.
The concept of charging sales tax on the basis of retail price is to charge the complete sales tax of the entire supply chain from the manufacturers till retail stage upfront from the manufacturer.
This step was introduced to collect sales tax payable by dealers. Distributors and retailers on their value addition as virtually no collection was being made from these segments for these goods.
The FBR further said that the FPCCI, KCCI and Trade Associations of all these goods approached FBR with request that it is practically impossible for these sectors to comply with the requirements of printing retail price on each and every item
to be sold in the market.
"These sectors also stated that the prices of these goods vary from market to market due to many circumstances, which makes it even more difficult to comply with the requirements of charging sales tax on retail price basis", it added.
"FPCCI, KCCI and Trade Associations requested that an alternate mode of collection of tax from dealers, distributors and retailers of these goods may be devised but the condition of charging sales tax on retail price basis may be done away with", it remarked.
The FBR said that in line with the requests of these sectors, FBR omitted these items from the Third Schedule to the Sales Tax Act, 1990, and in its lieu imposed a 2 percent additional tax on these items to be paid by the manufacturers in consultation and with the consensus of the trade bodies to provide relief to the
business and for providing ease of business.
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.
Furthermore, it is also informed that the 45 items of daily and essential use, which are not chargeable to sales tax include vegetables, pulses, fruits, red chillies, eggs, meat, fish, poultry, poultry feeds, ginger, turmeric, locally grown potato, locally grown onion, cereals, products of milling industry, ice, sugarcane, salt, fruit juices, bread, nan, chapattis, sheermal, bun, rusk, agricultural produce of Pakistan not subjected to process of manufacture, milk, yogurt, butter, cream, desi ghee, whey preparations for infant use, full cream milk, colors in sets, writing, drawing, and marking inks, erasers, exercise books, pencil sharpeners, geometry boxes, pens, ballpens, markers, and porous tipped pens, pencils color pencils, color pencils. (APP).
Source: The NEWS