KARACHI: The Federal Board of Revenue (FBR) on Tuesday allowed
three fuel suppliers to supply petroleum products on zero sales tax rate to the
exporters – at least seven months after the announcement of zero rating
facility.
The
FBR, in a fresh notification, said it allowed three energy companies to supply
oil and coal at zero-rate sales tax to five export-oriented sectors. It
directed two companies, namely Hascol Petroleum Limited and Byco Petroleum
Limited to supply diesel and Awan Trading Company (Pvt) Limited for coal supply
to the export sectors.
Under
the Sales Tax General Order No. 24, petroleum products are to be supplied
tax-free to textile, carpets, leather, sports and surgical goods sectors.
The
government restored the sales tax zero-rating for five export sectors from July
1, 2016. The provision of tax free petroleum products, including furnace oil,
diesel oil and coal made part of zero-rated regime through a notification on
June 30, 2016.
Zero
rating facility was introduced to resolve the issue of tax refunds. The
government unveiled ‘no fund no payment’ facility in agreement with the
businessmen, which fretted over the delay in release of refunds from the tax
authorities. Delayed fund release caused liquidity crunch and slowed down their
business progress.
However,
the refund claims have again surpassed Rs100 billion despite the implementation
of this facility. This was partly because not every business came under the
zero rating regime. At present, only a few exporting units, registered at the
tax departments in Karachi and Faisalabad, have been allowed to avail this
facility.
Sources
at FBR said more exporting units would be added to this regime after a thorough
examination. The sources said the FBR devised strict rules and bounds export
sectors to comply with the rules in order to avail this facility.
The
revenue body made the physical verification of a manufacturer’s premise by tax
officials mandatory before allowing the facility. An exporter has to apply for
the facility and its permission may take at least two months after the
submission of an application by a manufacturer.
The
fuel supply was added to the tax-free regime following the demand of textile
sector. Textile makers said they have installed power generating units for
export goods manufacturing due to power shortage.
The
power generating units consume bulk quantity of fuel and the sales tax rate at
17 percent on petroleum, lubricant and oil products cause further increase in
cost of production, they maintained.
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