ISLAMABAD (January 18 2005): The Central Board of Revenue (CBR) has announced that the retailers of sanitary wares and tiles will pay sales tax on the basis of 4 percent 'value addition' instead of 10 percent. The decision will be instrumental in attracting more investment. The CBR has amended Sales Tax Special Procedure Rules 2004 through SRO 59(I)/2005 issued on Monday on the recommendation of business community.
Official sources told this correspondent that the CBR has made drastic reduction in the mandatory 'value addition' on retail sale of sanitary wares and tiles reducing sales tax from 10 to 4 percent. Sales tax would be calculated on the basis of 4 percent 'value addition' instead of 10 percent on the retail sale of sanitary wares and tiles.
In budget 2004-2005, a special procedure for payment of sales tax on minimum 10 percent value addition by retailers was announced to simplify procedure and encourage voluntary compliance. The step was taken to promote tax-friendly culture, based on better understanding between taxpayers and tax officials.
Different retail sectors and trade bodies approached the CBR for fixation of benchmark saying sales tax payment on the basis of 10 percent 'value addition' was not practicable.
On the recommendation of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and other trade bodies, minimum value addition benchmarks for retailers of motorcycles, rubber tyres, steel products, electronic goods of domestic use and flat rolled products was scaled down to as low as 3 percent being pragmatic level of 'value addition' for these sectors.
Based on the same analogy, the industry had requested for revision of minimum value addition for retailers of 'sanitary wares and tiles' from 10 percent to 4 percent being the actual range of value addition at retail stage for these commodities, officials maintained.
Acceding to the recommendation of business community, the CBR has issued SRO 59(I)/2005 to reduce the mandatory value addition on retail sale of sanitary wares and tiles from 10 percent to 4 percent.
FOLLOWING IS THE TEXT OF THE SRO ISSUED ON MONDAY: In exercise of the powers conferred by section 71 of the Sales Tax Act, 1990, read with clause (9) of section 2, section 2, 3AA and 4, sub-section (2) of section 6, section 7A, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13, section 26AA and 34A, and the first and second provisos to section 45 thereof, the Federal government is pleased to direct that the following further amendment shall be made in the Sales Tax Special Procedure Rules, 2004, namely:-
In the aforesaid rules, in rule 19, in the Table, after S.NO.5 and the corresponding entries relating thereto, in columns 2 and 3, the following new entry shall be added namely:-
“6. Sanitary Wares and Tiles 4 %.”