ISLAMABAD: The Federal Government, Friday, announced a large number of relief measures in sales tax, federal excise duty, income tax and others in the federal budget for the fiscal year 2018-19. Majority of proposed relief measures pertained to Sales Tax and Federal Excise laws.
In order to provide concession to printers/publishers of Holy Quran, it is proposed that exemption from sales tax and Customs duty. This exemption will be available to federal and provincial governments as well as registered publishers of Holy Quran.
Value addition tax @ 3% is chargeable under Sales Tax Special Procedure Rules, 2007 to provide relief to this sector it is proposed that value addition tax @ 3% on import of RLNG may be removed. To address cash flow issues of Gas Distribution Companies, it is proposed that rate of sales tax may be reduced from 17% to 12% on import of LNG and supply of RLNG. Urea is chargeable to sales tax @ 5%, DAP @ Rs.100 per 50 kg bag and other fertilizers like NP, NPK, SSP, CAN are also charged reduced fixed rates of sales tax.
To promote agricultural growth reduction in rate of sales tax to 3% across the board on all fertilizers is proposed. It is further proposed that the rate of sales tax on supply of natural gas to fertilizers plant for use as feed stock, presently chargeable @ 10%, may be reduced to 5% to cater for cash flow issues of fertilizers manufacturers in view of reduction in rate of sales tax on fertilizers. Likewise, rate of sales tax on LNG imported by fertilizer manufacturers for use as feed stock is also proposed to be reduced from 5% to 0%. 82.
To promote fish farming, 10% duty on sales tax on fish feed is being removed. Similarly, sales tax is being exempted for preparation of fans and animal feed of dairy farms. In addition, sales tax on agriculture machinery is proposed to be reduced from 7% to 5%. These proposed measures are expected go a long way in promoting our agriculture, dairy, and livestock sectors.
Currently, Personal Computers and laptops are exempt from sales tax. However, exemption is not available in respect of computer parts. In order to promote local assembling and manufacturing of laptops and computers, it is proposed that exemption on 21 types of computer parts imported by manufacturers may be granted.
Stationery items were zero-rated under Fifth Schedule to the Sales Tax Act, 1990 which was subsequently withdrawn through Finance Act, 2016. It is proposed that zero-rating for stationery may be restored, to promote local stationery sector and reduce the prices of local stationery items.
Supply of finished fabric to and by retailers, to end consumers, and other supplies of finished fabric including carpets, leather etc. are subject to sales tax @ 6%. Similar rate of 6% is applicable on import of ready to use articles of textile and leather.
In order to facilitate and promote automation in addition to revenue generation, it is proposed that the rate of sales tax @ 6% maybe retained on the sales for those persons who are integrated with FBR online systems. For others, rate of sales tax is proposed to be applied @ 9% for both supply of above referred goods and import of finished goods of textile and leather
Presently value addition tax @ 3% under the Sales Tax Special Procedure Rules, 2007 is applicable on the import of second hand worn clothing and footwear .It is proposed to provide exclusion from value addition tax to the subject items. This would support lower income groups.
To enhance documentation and base of sales tax, further tax is proposed to be increased from existing 2% to 3%. This will not only discourage undocumented economy, but it will also result in revenue increase.
Federal excise duty on locally produced cigarettes is proposed to be enhanced in respect of Tier-1, TIER-2 and TIER-3 to Rs 3964, Rs 1770 and Rs 848 per thousand cigarettes respectively. Now the proposals related with Customs are being presented before the house:
The livestock sector continues to be the largest sub-sector of Agriculture in Pakistan. It provides livelihood and employment to millions in the rural areas of the country and the commitment of our government to sustain it remains a key aspect element to alleviate poverty.
To sustain the growth in this vital sector of the economy and provide further relief, it is proposed that;. Customs Duty of 3% on import of bulls meant for breeding purposes be withdrawn. Presently available concessionary rate of Customs Duty on the import of Feeds meant for livestock sector may be further reduced from 10% to 5% and fans meant for use in dairy farms be allowed at concessionary rate of 3% to members of the Corporate Dairy Association.
This will substantially reduce their cost of inputs and boost further expansion. In respect of the poultry sector, the concessionary rate of customs duty on import of growth promoters premix, vitamin premix, Vitamin B12 (Feed grade) and Vitamin H2 (Feed grade) is proposed to be further reduced from 10% to 5% for registered manufacturers of poultry feed.
To ensure that the appropriate quantities of such micronutrients are being added to the flour, it is being proposed that 3% Customs Duty on import of the micro feeder equipment be withdrawn. To provide relief for cancer treatment in Pakistan, the Government has exempted drugs from customs duties at import stage.
However the sole exception was Tasigna on which customs duty @ 5% is proposed to be withdrawn. It is also proposed that the rate of customs duty @11%, on corrective eyesight glasses be reduced to 3%. Import of machinery & equipment, is allowed duty free to charitable institutions and hospitals, under the provision of Pakistan Customs Tariff code 9917.
However there is no mechanism for their disposal. To redress this issue, it is being proposed that if such goods are disposed of within a period of 7 years of their import, the payment of duty and taxes leviable thereon shall be on payment of duty and taxes assessed at time of disposal whereas if disposal is after seven years no taxes would be payable.
To provide incentive to exports an inter-ministerial review has identified certain raw materials, used in export related sectors. It is therefore proposed that the existing rate of Customs duty on raw materials falling under 104 PCT codes are being exempted whereas in respect of 28 PCT code the Customs Duty rates are being reduced. 11% Customs Duty on Synthetic filament tow of acrylic or (PCT 5501.3000) is being withdrawn by inclusion in the Prime Minister Export Package.
Leather products are one of the leading export oriented sector of the country and have significant export potential in the international market. Recognizing this, it is being proposed to withdraw customs duty on import of tanned hides (including wet blue) by registered leather tanning sector.
Currently finished products and most of the raw materials are importable at 20% duty. It is proposed that for liquid Packaging Industry, the customs duty on inputs be reduced.. Regulatory duty on import of optical fiber cable is to be reduced from 20% to 10%. In addition, duty on fibre optic cable and other raw material be reduced to 5%.
To sustain domestic manufacturing sector it is essential that inputs not available locally are provided and made available at the optimal rates keeping in view the availability of domestically compatible substitutes. Acetic Acid is not locally manufactured and is a widely used raw material in various industries including food sector. It is proposed that CD on Acetic Acid (PCT 2915.2100) may be reduced from 20% to 16%.. For promotion of local industry, it is proposed that customs duty on import of plasters (PCT 2520.2000) may be reduced from 16% to 11% as it is used for producing Plaster of Paris Bandage.
Carbon Black rubber grade is importable at 20% customs duty which is a raw material for manufacturing of tyres. It is proposed that customs duty may be reduced from 20% to 16% on import of Carbon Black rubber grade. Presently, silicon electrical steel sheets are importable for manufacture of transformers at concessionary rate of 10% customs duty.
Transformers are a critical component of the power transmission and distribution infrastructure. To assist in up-gradation of the power infrastructure by reducing domestic manufacturing costs, it is proposed that concessionary rate of 10%customs duty on silicon electrical steel sheets for transformers may further be reduced to 5%.
Customs duty on import of such Pre-fabricated structures complete rooms, not locally manufactured, be reduced from 20% to 11% for setting up of new hotels / motels in hill stations (including AJK and Gilgit Baltistan), coastal areas of Baluchistan.
16% customs duty on charging stations for electric vehicles may be withdrawn. Custom duty on import of electric cars is proposed to be reduced from 50% to 25% in addition to exemption from regulatory duty of 15%. Import of CKD kits for assembly of domestically produced electric cars is proposed at 10%. c.
LED is an efficient alternative to save energy. However to further incentivize domestic manufacturing in Pakistan 5% customs duty on specified LED parts and components, is proposed to be withdrawn.
In order to meet the revenue targets for FY 2018-19, revenue measures will be required to be taken so as to maintain the overall fiscal deficit within the predicted limit. Rather than effecting any large scale changes in the existing tariff slabs to meet this objective, a more restrictive and narrower revenue intervention is predicated.
Accordingly, it is proposed that the rate of existing Additional Customs duty may be increased from 1% to 2%. Exception is being provided for Plant and machinery, Imports by Privileged Personnel /Organizations, Relief goods, Export Promotion regimes etc.