Finance Act 2017 has reduced Federal Excise Duty (FED) on telecommunication services from 18.5 to 17 percent.
According to the budget instructions (2017-18) issued by the Federal Board of Revenue (FBR) on Wednesday, the rate of federal excise duty on telecommunication services under Serial # 6 of Table-II of First Schedule to the Federal Excise Act, 2005 has been reduced from 18.5% to 17%.
Strict penal provision has been prescribed for manufacturing, possessing, transporting, distributing, storing or selling cigarette packs with counterfeited tax stamps, banderoles, stickers, labels or barcodes or without tax stamps, banderoles, stickers, labels or barcodes under section 33 of the Sales Tax Act, 1990 and section 19 of the Federal Excise Act, 2005.
These provisions, however, will come into force from the date when selling of cigarettes with tax stamps, banderoles, stickers, labels or barcodes is made mandatory.
Subjection of goods zero-rated under section 4 to further tax under section 3(1A) of the Sales Tax Act, 1990: Section 4 of the Sales Tax Act, 1990 providing for zero-rating had an overriding effect over the provision of section 3 including its sub-sections.
Further tax is chargeable under sub-section (1A) of section 3 of the Sales Tax Act, 1990. Sub-section (1A) of section 3 and section 4 of the Sales Tax Act, 1990 have been amended to provide for charging of further tax on goods which are zero-rated under section 4 of the Sales Tax Act, 1990.
However, such further tax shall not be applicable to goods and supplies covered under Fifth Schedule, as provided by amendment in SRO 648(1)/2013 vide SRO 585(1)2/107, dated 01.07.2017.
Automatic Stay Against Recovery
Proviso has been inserted after section 48 of the Sales Tax Act, 1990 and section 37 of the Federal Excise Act, 2005 to provide for automatic stay against recovery till the decision of Commission-IR (Appeals), which is subject to a condition that 25% of the amount of sales tax, federal excise duty is determined as payable under the order, has been paid by the taxpayer.
Electronic Service of Notices
Section 56 of the Sales Tax Act, 1990 and section 47 of the Federal Excise Act, 2005 have been amended to provide for validity of notices, orders, decisions, etc, sent electronically through email or to the e-folder maintained for e-filing of sales tax-cum federal excise return by public and private limited companies.
Validation of SROs/Orders
Section 74A of the Sales Tax Act, 1990 and section 47C of the Federal Excise Act, 2005 have been introduced to provide for validation of all notifications/orders which have been issued before commencement of Finance Act, 2017 in exercise of powers conferred upon the federal government under various provisions of the two statutes.
Introduction of Third Tier of Federal Excise Duty on Cigarettes
Cigarettes were subject to federal excise duty on two-tier basis. For tier-l, federal excise duty was chargeable @ Rs. 3,705 per thousand cigarettes whereas for tier-2, it was Rs. 1,649 per thousand cigarettes. Rate of federal excise duty for tier-I has been enhanced to Rs. 3,740 per thousand cigarettes.
For tier-2, it has been fixed at Rs. 1,670 per thousand cigarettes. A new tier-3 has been introduced where if on-pack printed retail price of cigarettes does not exceed Rs. 2,925 per thousand cigarettes, federal excise duty is chargeable at Rs. 800 per thousand cigarettes.
Increase in Federal Excise Duty on Cement
Cement was subjected to federal excise duty at Rs. 1.00 per kilogram which has been fixed at Rs. 1.25 per kilogram.