According to the sales tax relief provided through the Finance Bill (2012-13) issued here on Friday, the abolition of FED on 10 items would cause revenue loss of Rs 2 billion to the national kitty. The enhancement in the rate of the FED on cigarettes would generate an amount of Rs 10 billion.
The revision in the upward limit of price tiers of cigarettes to enhance the Federal Excise Duty on locally produced cigarettes enforced through amendment in Table-I of First Schedule to the Federal Excise Act, 2005, effective from June 2, 2012. The FBR has removed aberrations in rates of sales tax @ 22% and 19.5 percent to standard rate of 16% through rescinding of SRO644(I)/2007 dated 27-06-2007 vide SRO 594(I)/2012effective from the June 2, 2012.
The rates of the FED on international air travel have been increased in budget. Fro economy and economy plus the FED of Rs 3,840 would be applicable and for club, business and first class, the FED rate of Rs 6,840 would be applicable irrespective of the country of destination. The government has also revised the FED on foreign travel enforced through amendment in Table-I of First Schedule to the Federal Excise Act, 2005, effective from the July 1, 2012. The FBR has also simplified collection procedure of FED on air travel from Pakistan by excluding the charge of FED on air travel to Pakistan.
The government has also increased the rate of sales tax on steel sector from Rs 6/ kWh to Rs 8/ kWh which has been enforced through amended Sales Tax Special Procedures Rules, 2007.
The Federal Board of Revenue (FBR) has substituted zero-rating with exemption on supplies against international tender enforced through Finance Act, 2012 vide deletion of Supplies against International Tender from Fifth Schedule and addition in Sixth Schedule of the Sales Tax Act, 1990, effective from the June 2, 2012. The FBR has also substituted zero-rating with exemption on certain items such as remeltable scrap and sprinkler.
The government has also granted exemption of federal excise duty on livestock insurance enforced through amendment in Table-II of Third Schedule to the Federal Excise Act, 2005, effective from July 1, 2012. The FBR has also allowed retrospective exemption of federal excise duty on services rendered by Asset Management Companies enforced through amendment in Table-II of Third Schedule to the Federal Excise Act, 2005, effective from the July 1, 2012 The FBR has granted exemption to waste paper to enhance collection as well as restrict inadmissible input tax adjustment in this sector.