Revenue Board to update list of pharma raw materials for GST exemption

ISLAMABAD (March 06 2003) : The Central Board of Revenue (CBR) has now decided to update the list of pharmaceutical raw materials to extend general sales tax (GST) exemption at the import stage on hundreds of raw materials, which were actually exempted, but their names were not given in the list.

The CBR was required to update the list of pharmaceutical raw materials when SRO 211(I)/2001 of April 6, 2001 was replaced with the SRO 372(I)/2002 issued on June 15, 2002.

On the other hand, the CBR dropped the names of a large number of raw materials while updating the list, which created problems vis-a-vis exemption.

As a result of issuance of defective SRO 372(I)/2002, the Ministry of Health stopped clearing imported consignments of raw materials whose names were not notified in SRO 372(I)/2002, but contained in the previous SRO. 211(I)/2001.

Most of the consignments of imported pharmaceutical raw materials whose names were not present in the SRO 372(I)/2002 were stuck-up at the ports.

The authorities did not bother to take any action to update the list till Pakistan Pharmaceutical Manufacturers' Association (PPMA) complained that Health Ministry has refused to issue Form-I and II for the raw materials not present in the SRO 372(I)/2002.

Under SRO 211(1)/2002, the raw materials for the basic manufacture of pharmaceutical active ingredients and for manufacture of pharmaceutical products are exempt from payment of GST.

The exemption would be available on those raw materials which were specified in SRO 372(1)/2002 and liable to customs duty not exceeding ten percent ad valorem in the First Schedule to the Customs Act, 1969.

PPMA observed that Ministry of Health has refused to issue Forms-I & II for the raw materials, which were not included in the SRO 372(1)/2002 but are otherwise exempt under SRO 211(1)/2002.

The CBR has asked the Health Ministry to prepare a list of such raw materials, which were exempted under SRO 211(1)/2002 but were not included in SRO 372(1)/2002.

The ministry of health would finalise the list and submit the same to the Revenue Board for updating the SRO.

Meanwhile, the CBR has directed all the collectorates of customs to release the consignments of those raw materials, which were exempted from payment of sales tax under SRO 211(1)/2002 and were included in previous customs notification superseded by SRO 273(1)/2002.

The Ministry of Health should also issue instructions to its offices for issuance of Forms-I & II and other certifications pertaining to such raw materials, so that release of imported raw materials/ingredients be allowed as per the conditions laid down in SRO 372(1)/2002, dated 15th June, 2002, CBR added.

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