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19pc tax on foam products: FBR clarifies section 3(1A) of ST Act, SRO

19pc tax on foam products: FBR clarifies section 3(1A) of ST Act, SRO

ISLAMABAD: The Federal Board of Revenue will charge 19 percent sales tax (17 percent sales tax plus 2 percent extra-tax) on taxable supplies of ‘Proc Mattress Hard Foam,’ being a foam product.

According an FBR release, it has issued a sales tax clarification regarding section 3(1A) of the Sales Tax Act 1990 and SRO 648(I)/2013 dated July 9, 2013 to the Directorate General Procurement (Army), General Headquarter, Rawalpindi and all Chief Commissioners of Regional Tax Offices (RTOs) in this regard.

The FBR is of the view that supplies of said goods to unregistered persons (including government departments holding free tax number) are also subject to ‘further tax’ at one percent under section 3(1A) of the Sales Tax Act, 1990. The board, modifying its earlier letter dated January 1, 2014, clarified that taxable supplies of ‘Proc Mattress Hard Foam’ as mentioned in directorate’s aforesaid letter are chargeable to sales tax at 17 percent plus 2 percent extra tax under serial number 03 of the table of rule 588 of Sales Tax Special Procedures Rules. 2007 as amended by SRO 896(I)/2013 dated October 4, 2013 being a foam product. The FBR declared that supplies of the goods to unregistered persons (including government departments holding FTNs) are also subject to further tax at 1 percent under sect ion 3(1A ) of the Sales Tax Act, 1990. The DG Procurement (Army) is also liable to withhold 1/5th of the Sales Tax under SRO 660(I)/2007 dated June 30, 2007 and deposit the same into government exchequer, the FBR added.