Taxes imposed increased on kitchen items The cost of living is all set to surge in the days to come as the government has notified an increase in the rate of taxes and/or imposed new taxes on kitchen items like cooking oil and ghee,sugar,packed milk all imported goods, construction material and household electrical and electronic items.
Zero-rating shall not apply to export of goods specified in the SRO as made by air or land route to Afghanistan and through Afghanistan to Central Asian Republics (CARs),” the Federal Board of Revenue FBR notified through a circular titled “Finance Act 2019 – Explanation of Important Amendments in Sales Tax Act, 1990, Federal Excise Act, 2005 and Islamabad Capital Territory (Tax on Services) Ordinance 2001, date July 26 2019.
It, however, declared hospitals exempt from 17% sales tax on utilisation of energy like electricity and gas and reduced the rate of sales tax to 7.5% on bakery items.
The increase in the rate of taxes and/or imposition of 17% sales tax and FED on new items is aimed at collecting Rs5.55 trillion in taxes, which is around 40% higher than the collection in the preceding fiscal year ended June 30, 2019.
The move, however, will trigger a new wave of inflation in the country and the inflation rate may go into double digits soon.
“Powers of federal government to grant zero-rating curtailed and Board’s (FBR) similar powers withdrawn,” said the notification.
“The rate of FED on ghee and cooking/edible oils has been enhanced to 17% (from 16% previously). In case of products in retail packing, FED shall be payable on the basis of retail price.”
Exemption will not be available on ginned cotton as the same has been subject to reduced 10% rate of sales tax. Vessels imported for breaking up are now taxable at the rate of 17%. FED of Rs1.50 per kg levied on cement has been enhanced to Rs2 per kg.
Penalty on non-filing or late filing of sales tax returns, excluding cases where delay is less than ten days…has been enhanced to Rs10,000, it said.
However, gold and silver are now chargeable at the reduced sales tax rate of 1%. They have also been excluded from the purview of minimum value-addition tax of 3% at the import stage.