Sales tax zero-rating facility withdrawn from six units

KARACHI: The Federal Board of Revenue (FBR) has suspended the facility of sales tax zero-rating to at least six companies for misuse and inactivity.
The revenue body on Wednesday issued notifications in this regard and asked authorities to recover the evaded amount from the units.
The zero-rating of sales tax was allowed to manufacturing sector on utility bills in order to promote manufacturing and exports. For that purpose, FBR had given a detailed list to electricity and gas companies advising them not to charge sales tax from the companies in the list.
However, now the facility has been withdrawn, with immediate effect, from companies including Blue Cosmic (Pvt) Limited, F B Industries and Motif (Pvt) Limited for misuse of zero-rating facility available on electricity bills.
The FBR directed chief commissioner Regional Tax Office (RTO) Karachi to coordinate with K-Electric in order to cease the facility and recover evaded amount. Further, K-Electric has been asked to start charging sales tax on the supply of electricity to the respective units.
The FBR further withdrew the facility of zero rating on gas bills from Al-Asif Dyeing Industries and Habib Knits Fabrics (Pvt) Limited. Both the units are registered with RTO and FBR directed the concerned tax department to recover the amount. The Sui Southern Gas Company has also been asked to start charging sales tax.
In case of Dastagir Enterprises registered with RTO Karachi, the facility has been withdrawn as the unit has closed the manufacturing facilities. Moreover, the gas utility has been asked to charge sales tax if anyone is involved in business at the place of manufacturing.