FBR suspends zero-rating facility

KARACHI: The Federal Board of Revenue (FBR) has withdrawn sales tax zero-rated facility allowed to two textile units on consumption of electricity.

The FBR on Tuesday said the facility has been withdrawn due to its misuse by Hasni Fabrics (Pvt) Limited and Hamid Textile Industries, both located in Karachi. The FBR allows zero-rated sales tax on the supply of electricity to textile sector in order to reduce the cost of manufacturing and make the exportable goods competitive in the international market. However, the facility is misused by several textile units, causing huge revenue losses to the national exchequer. The FBR said the facility has been suspended on the recommendation of Corporate Regional Tax Office (RTO) Karachi. Further, the FBR directed the chief commissioner to coordinate with K-Electric regarding implementation of normal sales tax rate on both the textile units. “Besides, the RTO should submit report in respect of action taken / recovery made for misuse of the facility,” the FBR added.