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FBR proposal for restoration of zero-rating regime declined

FBR proposal for restoration of zero-rating regime declined

LAHORE: The Federal Board of Revenue (FBR) proposal’ for the textile sector for the restoration of zero-rating regime for five export-oriented sectors has been declined due to faster payments of refunds, sources said

The Ministry of Industries and Production and the Commerce Ministry had proposed the restoration of the zero-rating regime for the five leading export sectors.

Exporters have approached the prime minister and different parliamentary committees, underscoring the need for restoring the sales tax zero-rating regime in the budget 2021-22.

The alternate proposal of the industry was to reduce the sales tax rate from 17 percent to a lower percentage like five percent on the five export-oriented sectors. However, the FBR is against the withdrawal of the sales tax regime.

According to sources, the FBR can only propose to the policy makers and the final decision would be taken by the government.

Sources said zero-rating regime would not be restored due to speedy payment of refund mechanism under the “FASTER” system of the Federal Board of Revenue (FBR).

There is a significant progress on account of payment of sales tax refunds under the “FASTER” system, and there is no justification of the restoration of the sales tax zero-rating regime.