Federal budget 2010-11 has started reaping consequences. Traders have already increased prices of daily consumables, despite the fact that changes made in the federal budget will be applicable from July 1.
Budget documents indicate that the prices of agriculture implements, commercial vehicles, CNG equipment and certain medical products is set to jump after the removal of exemptions and zero ratings.
Budget documents reveal that the federal government has withdrawn zero rating by rescinding SRO 1161(I) 2007 which deals with the diapers falling under PCT heading 5601.1040.
The government has also withdrawn the sales tax zero rating by amending the SRO 549(I)2008 on import or supply of dedicating CNG buses for transportation of forty or more passengers in both complete knock down (CKD) and complete build unit (CBU) conditions.
In addition, trucks and dumpers exceeding five tonnes, trailers and semi trailers for transport of goods, road tractors for semi-trailers and prime movers and road tractors for trailers weather in CBU condition or in kit form are now chargeable of general sales tax rate of 16 percent.
Budget documents indicate that exemptions under the Sixth Schedule of the Customs Act 1969 has also been withdrawn on surgical tapes, ultrasound gel, diapers for adults, bricks, building blocks of cements including ready mix concrete blocks, computer software, ambulances, fire fighting vehicles, water disposal trucks, brake down lorries, special purpose vehicles for the maintenance of streetlights and overhead cables, aircraft, ships of gross tonnage exceeding 15 LDTs excluding those for recreational or pleasure purpose, defence stores whether manufactured locally or imported by the federal government against foreign exchange allocation for defence, including trucks, trailers and vehicles falling under PCT heading 87.04.
Spare parts and equipment for aircraft and ships, equipment and machinery of pilotage, salvage or towage for use in ports and airports, equipment and machinery for air navigation, equipment and machinery used for services provided for handling of ships or aircrafts in a customs port or customs airport are also chargeable at normal sales tax rate after the removal of exemptions.
Budget documents point out that bulldozers, combined harvesters and components imported in any kit form and direct materials or assembly or manufacture and import and supply of fully dedicated CND Euro-2 buses whether in CBU or CKD condition are also chargeable at 16 percent sales tax rate after the withdrawal of exemptions.
The government has also issued the SRO 480(1) 2011, which has rescind various exemption notifications, including SRO 1240(1) 2005 which dealt with exemption from whole of sales tax leviable on dump trucks for off-highway use, on-highway dump trucks of 320 HP and transit concrete mixers.
In addition, exemptions on certain locally manufactured and imported agriculture machinery, equipment and implements, import and supply of CKD kits of single cylinder agriculture diesel engines of 36 horse power are also withdrawn.