KARACHI: The Federal Board of Revenue (FBR) has clarified that all the items provided either in Table-I or Table-II or both the tables of SRO 1125(I)/2011 are eligible for the reduced/concessional rates.
In response to a query forwarded by Collector Appraisement West Shahnaz Maqbool, FBR clarified that import of finished goods of five sectors covered by SRO 1125(I)/2011 are chargeable to sales tax of 17 percent along with reduced value addition tax of 2.0 percent.
Shahnaz Maqbool had approached FBR seeking clarification regarding non-availability of concessionary/reduced rate of value addition tax under SRO 1125(I)/2011 for the reason that finished articles of leather and artificial leather, textile and textile made-ups have been excluded from the purview of the SRO under Table-1 have been examined.
FBR noted that under S. No. 4 of Table-11 of SRO 1125(1)12011, import of finished goods of five export oriented sectors covered by SRO 1125(1)/2011 and ready to use by general public. are chargeable to sales tax 17 percent along with 2.0 percent value addition tax and the position has remained unchanged after amendments introduced.
It has been learnt that commercial importers particularly of fabric are fast moving towards registration as manufacturing concerns. Sources said they get rented property and machinery and then apply for registration as manufacturing units. Inland Revenue officials are said to be issuing approval to these fake manufacturing units against bribe. These unscrupulous elements after getting registered as manufacturer vacate the rented property and the machinery is then used for registration of another fake manufacturing company. All this game is played to avail exemptions and benefits available for manufacturing concerns.
FBR should adopt a policy to track the imports under SRO 1125(I)/2011 and new importers registered as manufacturing units should not be allowed the exemptions for at least a couple of months or until these importers file their returns.
Collector Appraisement West Shahnaz Maqbool took a stand to avoid losses to national exchequer but it seems that the cartel of unscrupulous imports are more influential. A senior officer said these elements are well known, but they had established well their links everywhere including the judiciary and thus their dirty business was flourishing.
Sources said several amendments and clarification pertaining to the applicability of SRO 1125(I)/2011 had created much confusion even among the Customs authorities, and certain elements were taking full advantage of the situation in inflicting loss to the exchequer.