According to the FBR, subsidy granted on various fertilizers by the federal government has translated into reduced rates of sales tax and rate of sales tax on 50-kg bag of various fertilizers, on the basis of their chemicals compositions, under the Eighth Schedule to the Sales Tax Act, 1990. DAP having contents nitrogen, 18 percent and phosphate, 46 percent, would be subjected to sales tax at Rs 100 per 50kg bag.
NP (22-20) having contents nitrogen, 22 percent, and phosphate, 20 percent, would be subjected to sales tax of Rs 168 per 50kg bag. NP (18-18) having contents nitrogen, 18 percent, and phosphate, 18 percent, would be subjected to sales tax of Rs 165 per 50kg bag.
NPK-I having contents nitrogen, 17 percent, phosphate, 17 percent, and potassium, 17 percent, would be subjected to sales tax of Rs 251 per 50kg bag. NPK-II having contents nitrogen, 8 percent, phosphate, 23 percent, and potassium, 18 percent, would be subjected to sales tax of Rs 222 per 50kg bag. NPK-II containing contents nitrogen, 15 percent, phosphate, 15 percent, and potassium, 15 percent, would be subjected to sales tax of Rs 341 per 50kg bag. SSP with contents of phosphate 18 percent is subjected to sales tax of Rs 31 per 50kg bag.
CAN (calcium ammonium nitrate) is subjected to sales tax of Rs 98 per 50kg bag. The said rates are for fertilizers which are produced from gas other than imported LNG as reduced sales tax rate of 5% is already applicable on fertilizers produced from imported LNG under SRO 398(1)/2015, dated 8th May, 2015. In view of reduced rate of sales tax on fertilizers, rate of supply of natural gas to fertilizer plants for use as feed stock in manufacturing of fertilizer has also been reduced to 10% so that capital of fertilizer companies is not stuck up in refunds. Under the same rationale, rate of sales tax on phosphoric acid has also been reduced to 5%. Supplies of fertilizers have been exempted from further tax chargeable under sub-section (lA) of section 3 of the Sales Tax Act, 1990 by amending SRO 648(1)/2013 through SRO 585(1)/2017, dated 01.07.2017.
Sales tax on mobile phones: To promote information and communication technology, rate of sales tax on low-priced mobile phones and medium-priced cellular mobile phones have been merged to prescribe single sales tax rate of Rs 650 per set for both the categories.
Amendments in SRO 1125(1)/2011, dated 31.12.2011: import of raw and ginned cotton had been zero-rated through amendments made in SRO 1125(1)/2011, dated 31.12.2011, vide SRO 36(1)/2017, dated 23.01.2017.This facility of zero-rating on the import of cotton has been withdrawn with effect from 15th July, 2017 through amendments made in SRO 1125(1)/2011 vide SRO 584(1)/2017, dated 01.07.2017, by specifically inserting the words" imported raw and ginned cotton" as sub-serial number (g) in column 2 of Serial No. 2 of Table-I of SRO 1125(1)/2011 which provides for exclusions not entitled for zero-rating. Import of raw cotton and ginned cotton is chargeable to sales tax @ 5% with effect from July 2017 under Serial No. 5 of Table-I of the Eighth Schedule to the Sales Tax Act, 1990.
To ensure parity between rate of sales tax on commercial import of finished fabric and locally produced/supplied fabric, rate of sales tax on import of finished fabric has been fixed @ 6% along with 2% value addition tax. For the sake of clarification, PCT headings of finished fabric for the purpose of charging sales tax at import stage have been provided for through amending SRO 868(1)/2017, dated 31.08.2017. Rate of sales tax on supplies of finished fabric to and by retailers, to end consumers, other supplies of finished fabric, locally manufactured finished articles of textiles and textile made-ups, carpets, leather and artificial leather has also been enhanced from 5% to 6%. To remove ambiguity with respect to charging of further tax under section 3(1A) on items covered under SRO 1125(I)/2011, rate of further tax, has been specifically provided for through SRO 584(I)/2017, dated 01.07.2017, but at reduced rate of 1%. However, finished items covered under SRO 1125(I)/2011 shall continue to be subjected to further tax @ 2 percent.
Copyright Business Recorder, 2017