During the technical briefing on salient features of the Finance Bill (2011-12) arranged by the FBR here on Friday, FBR Member Inland Revenue Khawar Khurshid Butt told media that now three rates of sales tax would be applicable ie 0, 5 and 16 percent. The existing 4-6 percent sales tax applicable on local supplies of five export-oriented sectors has been combined into a single rate of 5 percent.
Under the new budget there is no new burden on the existing taxpayers and the legal and procedural amendments would improve the level of compliance. The new budget would also bring equitable taxation system in the country. We are also working on a new incentive scheme for the taxpayers to encourage voluntary compliance, Khawar Khurshid Butt added.
To a question, he said there is no change in the tax structure in Capital Gains Tax (CGT) on stock exchanges. The FBR has imposed 16 percent sales tax on 21 items including defence stores, computer software, ships, bulldozers and combined harvesters/components, CNG kits and mineral oil.
Finance Bill (2011-12) issued here on Friday has excluded 21 items from the Sixth Schedule of the Sales Tax Act for withdrawal of the exemptions. The FBR has withdrawn exemption of sales tax on defence stores at import and local supply to bring it in line with international best practices.
The exemptions have been withdrawn on surgical tapes; ultrasound gel; diapers for adults (patients); bricks and building blocks of cement including ready mix concrete blocks; computer software; ambulances, fire fighting vehicles, waste disposal trucks, brake down lorries, special purposes vehicles for the maintenance of streetlights and overhead cables; aircraft; ships of gross tonnage exceeding 15 LDTs, excluding those for recreational or pleasure purpose; defence stores, whether manufactured locally or imported by the federal government against foreign exchange allocation for defence, including trucks, trailers and vehicles falling under PCT heading 87.04 of the First Schedule to the Customs Act, 1969 (IV of 1969), specially modified for mounting defence equipments, their parts and accessories for supply to Armed Forces, spare parts and equipment for aircraft and ships covered by serial number 43 and 44 above, equipment and machinery for pilotage, salvage or towage for use in ports or airports, equipment and machinery for air navigation, equipment and machinery used for services provided for handling of ships or aircrafts in a customs port or Customs airport, such plant and machinery as is notified by the Federal Government in the official Gazette but if imported, these shall be entitled to exemption from sales tax on importation if these are not manufactured in Pakistan.
The sales tax exemption has also been withdrawn on bulldozers and combined harvesters; and components (which include sub-components, components, sub-assemblies an assemblies but exclude consumables) imported in any kit form and direct materials or assembly or manufacture thereof, subject to the same conditions as are envisaged for the purposes of exemption under the Customs Act, 1969 (IV of 1969) and import and supply of fully dedicated CNG Euro-2 buses whether in CBU or CKD condition.
Through withdrawal of SRO based exemption, the government has imposed sales tax on CNG kits, cylinders, valves, etc, commercial catalogues; rock phosphate; Phosphoric Acid and mineral Oil 97 percent (PCT heading 2710.0000) imported by importers, formulators or manufacturers pesticides. The FBR has also withdrawn federal excise duty (FED) on 15 items by deleting these items from the First Schedule of the Federal Excise Act 1990.
The FED has been abolished on the Solvent oil (non-composite); other; other fuel oils; mineral greases; transformer oil; other mineral oil excluding sewing machine oil; waste oil; carbon black oil (carbon black feedstock); Methyl tertiary butyl ether (MBTE); greases; organic composite solvents and thinners not elsewhere specified or included; prepared paint or varnish removers (i) solvent (composite( (ii) other (excluding thinners); viscose staple fiber; motor cars and other, motor vehicles principally designed for the transport of persons (other than those of persons (other than those of heading 87.02), including station wagons and racing cars of cylinder capacity exceeding 8500cc; air conditions and FED has also been abolished on deep freezers.
Finance Bill (2011-2012) further revealed that the Federal Excise Duty leviable on filter rods for cigarettes has been rationalise from Rs 1/- per filter rod to 20% ad val. The Federal Excise Duty on un-manufactured tobacco is being enhanced from Rs 5/- per kg to Rs 10/- per kg.