Sales tax zero-rating anomalies to be removed

ISLAMABAD (June 14 2005): The Central Board of Revenue (CBR) will shortly issue a new notification on the zero-rating of sales tax on import and supply of all items utilised in the textiles manufacturing, including carpet, leather, surgical and sports industries.

Official sources told Business Recorder on Monday that the CBR has decided to combine SRO 535 and SRO 536, issued in the budget, into a single notification to specify the correct PCT headings against all items liable to zero-rating of sales tax to remove ambiguities in these notifications, if any.

The issue came to limelight at a meeting between the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and CBR Member Sales Tax Shahid Ahmed.

It has been decided to clarify the terms 'surgical items' under the new notification, as the concerned industry is not clear about the details of items covered under the zero-rating regime. Similarly, items of other industries will also be specified for the purpose of zero-rating.

The new notification will also introduce changes in the Pakistan Customs Tariff (PCT) headings specified in the SRO 536. In certain cases, the PCT headings given in the SRO do not match with the items specified in the tariff 2005-2006. These errors will be rectified through issuance of the notification. The notification will fully emancipate textile sector from complex fiscal documentation and unnecessary tax compliance hassles.

Officials said that it is very important to revise the SRO for the entire textile industry as textile provides over 60 percent of national exports with employment of a large chunk of skilled and un-skilled labour.

In this regard, the CBR will incorporate the recommendations made by FPCCI pertaining to this zero-rating notification.

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