The government has also levied single stage tax @ 3 percent for retailers having annual turnover of more than 5 million rupees per annum. The levy includes 2 percent sales tax and one percent income tax as final discharge of tax liability.
Presently the scheme is restricted to retailers of specified goods chargeable to tax at zero percent, while other retailers paying sales tax on the basis of fixed value addition.
The measure is aimed at removing the confusion prevailing in the sector, particularly among the retailers dealing in both types of goods.
Zero-rating on trucks/dumpers would promote heavier transport vehicles required in construction and allied industry.
According to a CBR announcement, dairy products including milk, desi ghee, yogurt, etc enjoy sales tax exemption under the Sixth Schedule thereby sales tax paid on the inputs consumed in manufacture thereof is not adjustable. Thus, adding to the cost of dairy products.
Zero-rating of sales tax on dairy products would enable the manufacturers to offset the impact of tax paid on inputs and resultantly lower the cost of these products.
Dried milk without addition of sugar or any other sweetener would continue to remain exempted.
Similarly, zero-rating of sales tax on stationery items like pens, lead pencils and colours would reduce the cost of these items by taking off the burden of tax therefrom, without depriving the manufacturers of these items from the facility of input tax adjustment.
Under the present regime, chemical fertilisers are chargeable to sales tax on reduced ''deemed prices''. Hence, per acre amount of sales tax for compost is nearly six times higher than the urea fertiliser.
The measure is aimed at encouraging organic farming, efficient utilisation of water resources, efficient waste management and provision of an effective import substitution of chemical fertilisers.
Under the existing regime, exemption was restricted to imported aircraft having un-laden weight of 8000-kg or more. The measure is aimed at promoting the aviation industry, which uses aircraft below 8000 kg as opposed to commercial airlines using heavier aircraft.