- Following are the salient features of sales tax and Federal Excise Duty budgetary measure 2013-14.
- The budgetary measures pertaining to Sales Tax & Federal Excise are primarily aimed at:
- Rationalization of sales tax on steel sector, ship breakers and steel melters operating in the sugar mills Enforced through amendment in the Sales Tax Special Procedure Rules, 2007, effective from July 1, 2014.
- Registration of retailers on two tier system basis whereby retailers part of national and international chains, located in air-conditioned malls having debit and credit machines; chargeability of the sales tax at 5% in case of monthly electricity bill up to Rs 20,000 and at 7.5% of the monthly electricity bill exceeding Rs. 20,000 enforced through amendment in the Sales Tax Special Procedure Rules, 2007, effective from 01.07.2014.
- Input tax adjustment is proposed to be restricted only to the extent of goods and services actually used in manufacturing/sales of the taxable activity enforced through Finance Bill, 2014, effective from July 1, 2014.
- Electronic scrutiny and intimations system is to be introduced. It will conduct all checks and analysis objectively and will issue electronic intimations to the taxpayers Enforced through Finance Bill, 2014, effective from July 1, 2014.
- Replacement of capacity tax on aerated waters. The capacity regime has led to excessive litigation and the Lahore High Court has passed order against the scheme. Therefore, the existing scheme shall be reverted to the normal tax regime.
- Enforced through rescission of the Federal Excise Duty and Sales Tax on Production Capacity (Aerated Waters) Rules, 2013, effective from July 1, 2014.
- The rates of Federal Excise Duty on cigarettes are proposed to be enhanced enforced through Finance Bill, 2014, effective from July 1, 2014.
- Federal Excise Duty on the cement sector is being replaced from specific basis (Rs. 400 per MT) to 5% on retail price.
- Federal Excise Duty on international travel is being enhanced
- Federal Excise Duty on chartered flights is being proposed to be levied at the standard rate on full amount charged.
- Further tax charged at 1% on supplies made to unregistered persons is being specifically excluded from the purview of output tax.
- Transposition of SRO 575(I)/2006 to schedules with certain changes. In accordance with the policy of reviewing SROs, it is proposed to charge following seven sectors i.e. Sr. No. 2, 3, 4, 9, 15, 20 and 30 of SRO at reduced rate of 5% sales tax.
- The concessions for the socially sensitive sectors shall be retained. However, the concessions against S. No. 8, 16, 17, 24, 25, 32, 33, 37 and 38 shall be withdrawn.
- Transposition of SRO 727(I)/2011 to Schedule with 5% rate of sales tax. This notification grants exemption on import and supply of plant and machinery not manufactured locally subject to certain conditions. It is proposed to charge sales tax at reduced rate of 5% on such plant and machinery, subject to the same conditions, by transferring the notification to the relevant Schedule of the Sales Tax Act, 1990.
- Transposition of SRO 549(I)/2008, dated 11.06.2008 to Fifth Schedule. This notification grants zero-rating on certain goods, including petroleum crude oil, certain raw materials for export oriented sectors, etc. Since this zero-rating is considered essential, while the notification is required to be deleted, it is proposed to transfer the items in the notification to the Fifth Schedule of the Sales Tax Act, 1990.
