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Individual availing DTRE reliefs can operate under GST regime

ISLAMABAD (January 02 2004): The Central Board of Revenue (CBR) has conveyed to the exporters that a person availing of Duty and Tax Remission for Export (DTRE) concessions can simultaneously operate under normal general sales tax (GST) regime, an order issued to the exporters associations and collectors here on Thursday said.

The associations raised question that manufacturers-cum-exporters were free to import six months requirements of raw material under Article 297 (4) of the DTRE Rules as it was not clear to many DTRE claimants that they could make taxable purchases and local taxable supplies while claiming input and paying output tax.

The exporters raised another question that under the amended DTRE Rules, electricity and natural gas have been included in the definition of input goods. It is not clear to the Water and Power Development Authority (Wapda) and Sui Northern Gas Pipeline Limited (SNGPL) whether they can supply these inputs without charging the sales tax.

The CBR said that Wapda and gas companies, not being indirect exporters, could not supply electricity and gas against Zero-rated invoices (free of sales tax) to a DTRE approved exporter.

The CBR also ruled that refund or input adjustment of sales tax paid on electricity and gas actually consumed for the DTRE purposes could, however, be claimed/availed of on the monthly sales tax return, to the extent of proportionate consumption thereof in the production of the exported goods.

The CBR also said that the input tax paid on electricity and gas could not be adjusted in full by the manufactures having no residential colonies, but using these utilities simultaneously for production purpose as well as for offices located within the same factory premises exclusively out of industrial connections.

It is, however, clarified that under Rule 302 A, refund or input adjustment of sales tax paid on electricity and gas was admissible to the DTRE approved exporter only to the extent of proportionate consumption thereof in the production of exported goods.

The CBR has also directed the collectors that consolidated DTRE approval could be granted to an indirect exporter having more than one supply orders from a DTRE approved direct exporter with suitable time-bound financial ceiling on the analogy of the DTRE approval given to a direct exporter on the basis of his past six months export performance.

In this connection, the tax authorities will shortly issue necessary instructions to the field formation.

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