FBR yet to notify beneficiaries of sales tax concessions

KARACHI: The Federal Board of Revenue (FBR) has yet to announce the name of the taxpayers who can avail the sales tax concession on the purchase of fuel, experts said on Monday.

The experts said the government, in the budget for the current fiscal year, revised the sales tax regime for the export sector and re-introduced zero-rated or ‘no-payment no-refund’ scheme.

A tax expert said the government also allows zero-rate sales tax facility on the purchase of fuel, such as oil, diesel and lubricants, “but the relaxation is subject to Sales Tax General Order (STGO) to be notified by the FBR.”

“The re-introduction of zero-rated scheme was notified on June 30, but so far the FBR has been unable to issue the names of eligible persons who can avail this facility,” the expert said.

Chartered accountant Asif Haroon of A F Furguson and Company said the FBR issued SRO 491(I)/2016 on June 30, which revamped the applicability of sales tax on five export sectors. Provision of sales tax zero-rate on supply of fuel to eligible persons was also added.

“In order to facilitate the taxpayers the FBR should issue STGO,” he added. The changes were notified to address the problem of refunds accumulation on account of sales tax levy at input stage, Haroon elaborated.

“Under the new scheme, import and supply of industrial inputs have been zero-rated, which was previously subject to sales tax at three percent,” he said. “However, sales tax at five percent will be applicable on supply of finished goods.” 

He said imported finished goods will remain subject to sales tax of 17 percent. The experts also said though the scheme is based on the concept of ‘no-tax no-refund’, which may resolve the issue of refunds, yet the refunds would continue to accumulate for the multiple industrial inputs.

They said the items, which are subject to sales tax at the rate of zero percent under the latest notification, should not be subject to further tax.  Early this month, the FBR issued a clarification, which, according to the tax experts, means that zero-rate supply would too be subject to further tax. “FBR should re-visit its clarification relating to further tax on zero-rated goods supplies under SRO 1125,” Haroon remarked.