FBR reduces sales tax on petrol to nominal 1.43pc

ISLAMABAD: The Federal Board of Revenue (FBR) has reduced the sales tax on petrol to a nominal 1.43 per cent effective from November 11, 2021.
The sales tax rate has been reduced from 6.84 per cent to provide relief to the masses against a sharp rise in the prices of petroleum products in the international market. The FBR issued SRO 1450 (I)/2021 for announced reduction in the sales tax rates on petrol and high-speed diesel. The tax authority reduced the sales tax rates by 73 per cent on petrol, compared with the rates notified on October 7, 2021.
The revenue body also reduced the rate of sales tax on high-speed diesel to 6.75 per cent from 10.32 per cent.
However, the sales tax rates on kerosene and light diesel oil (LDO) have been kept unchanged at 6.70 per cent and 0.20 per cent, respectively. The revenue body has already imposed a reduced rate of sales tax on petroleum products, as the normal sales tax rate is 17 per cent.
The government on November 4, 2021 notified increased petroleum prices, which are now at an all-time high.
Under the notification, the petrol was fixed at Rs145.82/litre instead of Rs137.79, showing an increase of Rs8.03. The HSD has been fixed at Rs142.62/litre, compared with Rs134.48, up Rs8.14. The price of kerosene was set at Rs116.53/litre from Rs110.26, up Rs6.27. Likewise, the rate of light diesel oil (LDO) increased to Rs114.07/litre from Rs108.26, showing an increase of Rs5.72.
According to the government authorities, despite the all-time high prices, the government had absorbed the price shocks through reduction in the sales tax rates.
Meanwhile, the Federal Board of Revenue (FBR) will abolish tax concession available on the supply of sugar by the end of this month, official sources said on Thursday.
“The concession available on the sugar sales will end on November 30, 2021,” a senior official at the Large Taxpayers Office (LTO) Karachi said. Through the Finance Act, 2021, the government withdrew the minimum sales tax rate on sugar. Further, the sales tax on sugar supply was made subject to retail price.
However, with the rising trend in sugar retail prices, the prime minister directed the tax authorities to defer the implementation of sales tax on retail sales of sugar for some time.
In pursuance to the prime minister’s directive, the FBR issued a SRO 989 (I)/2021 on August 5, 2021 to postpone the implementation of the sales tax on sugar at retail stage. Now, the sales tax rate at 17 per cent would be applicable on the retail sale of sugar from December 1, 2021.
The retail price of sugar/kilogram is hovering around Rs110 and Rs120 in the domestic markets. The retail price of the commodity hit Rs160 last week, owing to the supply constraints.
The official said the withdrawal of tax concession would have an implication on the retail price. However, the official said the crushing season is about to start by November 20, 2021, which would ensure the availability of the commodity and it would also reduce the price in the open market.
Prior to the Finance Act, 2021, the sugar was subject to sales tax at minimum value of Rs60/kilogram; however, following the directives of the prime minister to provide relief and considering the higher price of the commodity, the revenue board enhanced the minimum value up to Rs72 for the calculation of sales tax.
To maintain the sugar prices after the crushing season, the FBR has decided to deploy officials at all the sugar mills across the country. The LTO Karachi official said the unit has the jurisdiction over around 34 sugar mills. The unit is seeking approval from the FBR for posting tax officials at the sugar mills.
Meanwhile, the LTO Lahore, having jurisdiction over sugar mills, had already started deploying officials. The official said the FBR has intended to monitor the entire supply chain of sugar from manufacturing to retail stage for plugging tax leakages. – TLTP