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  • Sep 21st, 2017
  • Comments Off on FBR will collect ST, FED on all imported goods
The Federal Board of Revenue (FBR) will collect sales tax and federal excise duty on all imported goods irrespective of their final destination, including non-tariff areas, in Pakistan. According to the FBR's budget instructions (2017-18) issued by the FBR here on Wednesday, under clause (b) of sub-section (1) of section 3 of the Sales Tax Act, 1990 and the Federal Excise Act, 2005, goods imported into Pakistan are subject to sales tax and federal excise duty.

However, there has been a confusion prevailing as to whether sales tax/federal excise duty at import stage was applicable on import of goods which were meant for ultimate consumption in non-tariff areas where Sales Tax Act, 1990 and Federal Excise Act, 2005 have not been extended. To remove this confusion, the words "irrespective of their final destination in territories of Pakistan" have been inserted in clause (b) of sub-section (1) of section 3 of the Sales Tax Act, 1990 and Federal Excise Act, 2005 which inter alia means that all goods imported into Pakistan are subject to sales tax and federal excise duty. Exception of course is available to those goods which are specifically exempt/zero-rated under the provisions of the Acts or SROs issued thereunder.

Subjection of goods zero-rated under section 4 to further tax under section 3(1A) of the Sales Tax Act, 1990: Section 4 of the Sales Tax Act, 1990 providing for zero-rating had an overriding effect over the provision of section 3 including its sub-sections. Further tax is chargeable under sub-section (1A) of section 3 of the Sales Tax Act, 1990. Sub-section (1A) of section 3 and section 4 of the Sales Tax Act, 1990 have been amended to provide for charging of further tax on goods which are zero-rated under section 4 of the Sales Tax Act, 1990. However, such further tax shall not be applicable to goods and supplies covered under Fifth Schedule, as provided by amendment in SRO 648(1)/2013 vide SRO 585(1)2/107, dated 01.07.2017.

Tier-l Retailers: Definition of tier-1 retailers has been introduced through insertion of clause (43A) in section 2 of the Sales Tax Act, 1990. Under the provisions of newly inserted sub-section (9A) of section 3 of the Sales Tax Act, 1990, tier-1 retailers are required to pay sales tax under the normal regime at standard rate of sales tax @ 17% under sub-section (1) of section 3 of the Sales Tax Act, 1990 save sales tax on goods covered under SRO 1125(1)/2011, dated 31.12.2011 on which sales tax has to be paid at the rate prescribed in the notification.

Tier-l retailers also have the option to pay sales tax @ 2% of total turnover provided option for payment of sales tax on the basis of turnover to be exercised by is of July. Field formations are requested to enforce the provisions in letter and spirit to broaden narrow tax base of sales tax and for collection of due tax from tier-l retailers, the FBR added.



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