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Zero % ST on raw materials for stationery, dairy products

Staff Report

ISLAMABAD: The Federal Board of Revenue (FBR) on Monday said zero percent sales tax would be charged on imported and locally purchased raw materials, subcomponents, components, sub-assemblies, assemblies for the manufacture of 18 types of stationery products and dairy products subjected to some conditions.

The products include, colours in sets, writing, drawing and marking inks, erasers, exercise books, pencils, sharpeners, geometry boxes, pens, ball-pens, markers and porous tipped pens, colour pencils, milk including flavoured milk, yogurt, cheese, butter, cream, desi ghee, whey and cream, concentrated and added sugar or other sweetening ingredients, preparations for infant use put up for retail sale and fat filled milk.

SRO 863(I)/2007 issued in this regard mentioned conditions like sales tax registered manufacturer of the items having suitable in-house facilities shall submit a complete list of his annual requirement of items (inputs), which are intended to be imported or purchased locally for the manufacture of goods to the collector of sales tax and federal excise having jurisdiction.

The collector shall accept the declaration of input and output ratio of the manufacturer without any physical verification in case the declared input and output ratio and raw material requirement is in accordance with the prevailing industry average or the raw material consumption pattern of the applicant or manufacturer.

In case the collector is not satisfied with the declared input and output ratios of the items to be manufactured because of their being prima facie not in accordance with the prevalent average of the relevant industry or for any other reason, he may, after allowing a six-month provisional quantity, make a reference to the IOCO for final determination thereof. On receipt of report from IOCO the collector shall then determine the final annual quantitative entitlement of inputs and grant him final approval for zero-rated purchases or imports. In case of non-receipt of report from IOCO within four months of the application made by the manufacturer, the collector shall provisionally allow another six months quantity to the applicant manufacturer.

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