Revision for five zero rated sectors: SRO1125/I/2011

The Federal Government has again revised scheme for five zero-rated sectors and has issued notification No. S.R.O. 1125/I/2011 dated 31st December, 2011. The benefit of this notification is available to Manufacturers, Importers, Exporters, Wholesaler and Retailers of textile, carpets, leather, sports and surgical goods/sectors. The rate is either zero or five percent with full availability of input tax. Main features of the scheme are as under:-

i.Sales tax on import of raw materials/inputs by manufacturers of these sectors will be zero.

ii.If imported by other manufacturers, sales tax will be charged @ 5%.

iii.Commercial importers will be charged tax @2% + 1% value addition tax which will be adjustable at subsequent supply. If they supply to zero-rated sectors, no tax shall be charged, but if they supply to non zero-rated sectors or unregistered persons, tax will be charged @ 5%.

iv.Imported finished goods will be charged to tax @ 5% plus value addition tax @ 1%.

v.Finished goods sold to retailers whether registered or not, or end consumers shall be charged to tax @ 5 %. However, industrial inputs/raw materials will be supplied @ 0 % to registered persons upto whole sale stage.

vi.The registered retailers shall pay tax @ 5% with full availability of input tax adjustment and no further tax will be required to be paid.

vii.Vendors will charge 5% tax on their processing charges if their principal is unregistered. If registered, no tax will be charged.

viii.The registered manufacturers will be allowed adjustment of tax paid on machinery, parts, spares, lubricants and all other inputs, including electricity and gas. They can even avail zero rated facility on their electricity and gas bills for which they are required to apply to FBR.
Queries in this regard are welcome.