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Tax incentive on sugar export: compliance of SRO provisions being verified




  • The Federal Board of Revenue (FBR) is confirming from Commissioners of Inland Revenue concerned whether or not sugar manufacturers are complying with provisions of SRO.77(I)/2013 by presenting proof of sugar exports to avail reduced rate of 0.5 percent duty on local sales equivalent to assigned export quota. 

    Sources told Business Recorder here on Sunday that the government had notified tax incentive on the export of sugar by drastically reducing Federal Excise Duty (FED) from 8 percent to 0.5 percent on local sale of sugar equivalent to additional quantity (500,000 tons) actually exported by the sugar mills as per assigned export quota. The FBR had issued SRO.1072(I)/2013 to this effect. 

    Earlier, under SRO.77(I)/2013, 0.5 percent rate of duty was also applicable to the quantity of local supply of sugar equivalent to the quantity actually exported by the sugar manufacturer, in accordance with the export quota allotted in pursuance of the decision of the ECC in its meeting held on January 10, 2013. 

    One of the key condition under SRO.77(I)/2013 was that the sugar manufacturer will present the proof of such export to the Commissioner of Inland Revenue concerned along with the return for the tax period following the tax period in which such export took place. This is subject to the condition that the quantity exported does not exceed the quota allotted in pursuance of the aforesaid decision of the ECC. 

    In line with the conditions of SRO.77(I)/2013, the FBR is verifying from the Commissioners of Inland Revenue concerned that sugar manufacturers are fulfilling the laid down condition of the said notification by submitting proof of sugar export to avail reduced rate of 0.5 percent duty on its local sale equivalent to assigned export quota. 

    Under RO.77(I)/2013, the rate of the FED on white crystalline sugar (Pakistan Customs Tariff headings 1701.9910 and 1701.9920) would be 0.5 percent. This is subject to the condition that the 0.5 percent rate of duty shall only be applicable to the quantity of local supply of sugar equivalent to the quantity actually exported by the sugar manufacturer, in accordance with the export quota allotted in pursuance of the decision of the ECC in its meeting held on January 10, 2013. 

    Secondly, the sugar manufacturer shall present the proof of such export to the Commissioner of Inland Revenue concerned along with the return for the tax period following the period in which such export took place. The sugar manufacturer shall also file the calculation in the form given in the Annexure to this notification along with the return. Thirdly, the quantity exported does not exceed the quota allotted in pursuance of the aforesaid decision of the ECC. 

    If a sugar manufacturer actually exports any quantity of sugar, only then the sugar manufacturer is allowed to charge the FED on equivalent quantity of local sale of sugar on supplies made in the tax period succeeding the tax period in which the export took place, notification added. 

    Copyright Business Recorder, 2014

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