The Federal Board of Revenue (FBR) has issued designated customs tariff headings falling under the category of finished fabric at import stage for accurate collection of 6 percent sales tax along with 2 percent value addition tax on such items on imports. The FBR has amended SRO.1125(I)/2011 through an SRO.868(I)/2017 here on Thursday.

A tax expert has informed that the FBR has issued notification 868(I)/2017 dated August 31, 2017. The tax expert said that confusion and dispute over application of sales tax on finished fabrics at custom stage arose immediately after the introduction of amendment vide SRO.584 in SRO.1125(I)2011 in last budget.

The customs appraisement department is of the view that in the absence of specified customs tariff heading every fabric at import can be cleared at zero- rate sales tax for subsequent industrial use which defeats the purpose for introducing 6 percent sales tax on import of finished fabrics. The FBR though issued a clarification last month but issue remains unsolved.

The FBR finally in order to remove the ambiguity has forced to brought this amendment in which they specified the PCT headings of finished fabrics which are chargeable to sales tax @ 6 percent along with 2 percent value addition sales tax at import stage on imports by commercial imports, tax expert added.

Following is the text of the SRO issued here on Thursday: S.R.O. 868(1)/2017.- In exercise of the powers conferred by sub-section (1), clause (b) of sub-section (2) and sub-section (6) of section 3 and clauses (c) and (d) of section 4 read with clause (b) of sub-section (1) of section 8 and section 71 of the Sales Tax Act, 1990, the Board with the approval of the Federal Minister-in-charge is pleased to direct that the following further amendments shall be made in its Notification No. S.R.O. 1125(1)/2011, dated the 31st December, 2011, namely:-

In the said Notification,-

(a) in Table-I, in column 1, against serial number 86, in column (3), for the figure "3824.6110", the figure "3907.6110" shall be substituted; and

(b) in Table-Il, in column (1), against S. No.1, in column (2), for the existing sub-serial (viii) and entries relating thereto in columns (2), (3) and (4), the following shall be substituted, namely:-

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"( viii) Commercial import      50.07, 51.11, 51.12,             6% plus 2%

of finished fabric              5113.0000, 52.08, 52.09,     value addition

                               52.10, 52.11, 52.12,                   tax"

                               54.07, 54.08, 55.12,

                               55.13, 55.14, 55.15,

                               55.16, 58.01, 58.02,

                               58.04, 5805.0000, 58.06,

                               5809.0000, 58.10,

                               5811.0000 and Chapter 60

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Copyright Business Recorder, 2017