The Federal Board of Revenue (FBR) has abolished sales tax on the local supply of 300,000 metric tons of sugar imported by the Trading Corporation of Pakistan (TCP).
The FBR has issued SRO.1038(I)/2020 here on Monday to amend S.R.O. 751(1)72020, dated the 20th August 2020.
Earlier, the FBR had exempted sales tax and withholding tax on the import of 300,000 metric tons of sugar by the TCP. The FBR had exempted the whole of the sales tax on the import of 300,000 metric tons of white sugar, specification-B as per PSQCA standards by the TCP.
The exemption of sales tax on the local supply of sugar will now be appliable on the same quantity already imported by the TCP.
The federal cabinet on August 4, 2020, decided to exempt import of sugar by TCP and recipient agency/ies to be nominated by the Ministry of Industries from all duties and taxes at the earliest to ensure a timely and smooth transfer from ports, storage, logistics and supply to respective destinations.
On the direction of the ECC held on August 21, 2020, the TCP floated a tender with changed specifications of medium to fine quality of 100,000 MT wherein only 25,000 MT was awarded @ $434.8 PMT.
The TCP floated another tender of 100,000 MT and a quantity of 76,700 MT offered against the tender at the rate of $ 425 PMT. Moreover, TCP was in process of floating another tender of 50,000 MT. It was anticipated that the imported sugar of the TCP will start arriving in Pakistan from October 17, 2020.
The Government of the Punjab’s demand is between 200,000 to 300,000 MT sugar and accordingly, the Ministry of Industries and Production has nominated the Government of Punjab as the recipient agency. The present working shared by TCP shows that the price offered to recipients and subsequently estimated sale price will be between Rs. 94.43 to Rs. 96.27 per kg inclusive of the landed cost of sales tax at the rate of 17 percent, income tax 0.25 percent, transport cost/packing/margin of Rs. 8 per kg.
Ministry of Industries and Production recently informed a meeting that as per SOPs intimated by the Government of the Punjab, imported sugar is going to be sold at a rate monitored and controlled by the Government.
This price, being more than the actual market price, may not attract any buyer from the recipient agencies and will require a subsidy from the government.
Ministry of Industries and Production proposed that sales tax on supply of sugar imported by TCP of up to 300,000 MT may be exempted subject to arrival of such sugar and SRO 751(1)/2020 of August 20, 2020 of Revenue Division may be amended accordingly.
Subsequently, the ECC has approved the proposal and FBR has issued the notification here on Monday.