Page 9 of 26 SUMMARY OF BUDGETARY MEASURES FOR THE FISCAL YEAR by decree

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									                    SUMMARY OF
       BUDGETARY MEASURES
           FOR THE FISCAL YEAR
                     2008 - 2009



Consultants: Customs, Sales Tax, Federal Excise and WTO matters




             COMMENTARY ON:
           CUSTOMS, SALES TAX &
              FEDERAL EXCISE
                                                               Page 2 of 26




CONTENTS:

 Budget Highlights                                   03 - 04

 Proposed Amendments:
        - Customs                                     05 - 06
        - Sales Tax                                   07 - 10
        - Federal Excise                              11 - 14

 Notifications:
        - Customs                                     15 - 19
        - Sales Tax                                   20 - 23
        - Federal Excise                                   24

 Declaration                                              25

 Brief Overview of Company                                26




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                              An Advisory Service of Customs, Sales Tax, Federal
                              Excise & W.T.O Matters
                                                                           Page 3 of 26



                         BUDGET HIGLIGHTS:

CUSTOMS

   Creation of the Office of DG PCA
   Powers of the Collector to suspend Unique User Identifier
   Custodian of Goods held liable for recovery of duty / penalty
   Extension in the period of adjudication of cases
   Monetary Limit for Single Bench of Appellate Tribunal enhanced
   Chairman FBR empowered to rectify the ADRC‟s orders

SALES TAX

   Definitions of Certain Terms Substituted / Inserted
   Enhancement of Standard Rate of Sales Tax
   Abolishment of Retail Tax Scheme
   Period for Input Tax Adjustment reduced to six months
   Adjustment on purchase of fixed assets
   Concept of Carried Forward introduced once again
   Audit by the Sales Tax Department in Tax Fraud cases
   Period for Revision of Sales Tax Return enhanced
   Abolishment of Penalty for non-filing of summary statement
   Uniform Rate of Default Surcharge
   Extension in adjudication period
   Extension in time for decision of Appeal
   Monetary Limit for Single Bench of Tribunal enhanced
   Chairman FBR empowered to Rectify ADRC‟s Orders
   Concept of Representative of Registered Person & his liabilities introduced
   Issuance of Duplicate Sales Tax Documents
   Certain items excluded from Third Schedule
   Changes in Sixth Schedule

FEDERAL EXCISE

   Definitions of Certain Terms Substituted / Inserted
   Scope of FED Widened
   Period for Revision of Federal Excise Return enhanced
   Single Return for the Composite Units
   FBR empowered to borrow the provisions of Sales Tax
   Uniform Rate of Default Surcharge
   Determination of Value
   Recovery of duty in case of collusion


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                                          An Advisory Service of Customs, Sales Tax, Federal
                                          Excise & W.T.O Matters
                                                                          Page 4 of 26


   Penalty for non filing of return
   Extension in time for adjudication / appeals
   Extension in period to call the records
   Period for rectification of orders extended to five years
   Chairman FBR empowered to Rectify ADRC‟s Orders
   Issuance of Duplicate Federal Excise Documents
   Increase in the rate of F.E.D
   Levy of Excise duty on concentrate extracted from imported juices
   Excise Duty on Cigarettes, Cement, Motor Vehicles
   Enhancement of Excise Duty on Services
   Enhancement of Excise Duty on Air Travel
   Enhancement of Excise Duty on Insurance Services
   Enhancement of Excise Duty on Franchise Fee




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                                         An Advisory Service of Customs, Sales Tax, Federal
                                         Excise & W.T.O Matters
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     AMENDMENTS PROPOSED THROUGH FINANCE BILL, 2008

S.No.               Proposed Amendments                                   Sections

                                 CUSTOMS
 1      Creation of the Office of DG PCA
        A new subsection 3DD has been proposed to be
        added in the Act for creation of the organization
        of Directorate General of Post Clearance Audit
                                                                      Section-3DD
        (PCA) which will audit the import and export
        documents, subsequent to the clearance of
        import/export consignments.

 2      Collector empowered to suspend Unique User
        Identifier
        By an amendment proposed in Section-155F the
        Collector of Customs will be authorized to                    Section-155F
        suspend the use of „unique user identifier‟ of a
        registered person, on receipt of any complaint.

 3      Custodian of Goods held liable for recovery of
        duty / penalty
        By an amendment proposed in Clause (43) to
        Section-156(I) of the Act, alongwith owner of
        the goods, the custodian of goods has also been
                                                                         Section-
        made liable for recovery of duty and imposition
                                                                        156(1)(43)
        of penalty in respect of such goods which are
        fraudulently concealed or attempted to be
        removed from bonded area of a seaport, airport
        or dry port.

 4      Extension in the period of adjudication of
        cases
        Time frame within which a case can be
        adjudicated in terms of the provisions of Section-             Section-179
        179 of the Act has been proposed to be extended
        from the existing 90 days to 120 days.

 5      Monetary Limit for Single Bench of Appellate
        Tribunal enhanced
                                                                      Section-194C
        By an amendment proposed in Section-194-C of
        the Act the powers of a single bench of the


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                                           Excise & W.T.O Matters
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    Customs, Excise and Sales Tax Appellate
    Tribunal for hearing appeals have been increased
    from existing rupees five million to rupees 10
    million.

6   Chairman FBR empowered to rectify the
    ADRC’s orders
    Chairman FBR has been proposed to be
    empowered to rectify the orders passed by the                Section-195C
    ADR Committees. Earlier no such powers were
    available to the Chairman.

7   Reduction in With Holding Tax Rates On
    Imports
    Through Finance Bill the rate of withholding tax           Section 148 of
    at import stage has been proposed to be reduced             Income Tax
    from 5% to 2% at par irrespective of the fact             Ordinance, 2001
    whether imports are being made by the
    manufacturers or the commercial importers.




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                               SALES TAX
8    Substitution of Definitions
     Definitions of various terms used in the Sales Tax
     Act, 1990 are proposed to be substituted through
     this Finance Bill. The Definitions which have been
     proposed to be substituted include the terms
                                                                        Section-2
     “Arrears”, „Associates (Associated Person)”,
     “Boar”, “Default Surcharge”, “Input Tax”, “Output
     Tax”, “Person”, “Supply”, “Tax”, “Taxable
     Activity”, “Time of Supply”.

9    Insertion of New Definitions
     Certain new definitions have been proposed to be
     inserted in the Sales Tax Act, 1990 which includes
     “Association of Persons”, “Company”, “Firm”,                       Section-2
     “Provincial Sales Tax”, “Sales Tax”, “Trust” and
     “Unit Trust”.

10   Enhancement of Standard Rate of Sales Tax
     The standard rate of Sales Tax has been revised
     from 15% to 16%. Now all taxable supplies /
                                                                        Section-3
     imports and taxable services shall be subject to
     Sales Tax @ 16% w.e.f. 1st July, 2008.

11   Abolishment of Retail Tax Scheme
     The Scheme of Retail Tax has been abolished by                Section-3AA &
     omitting Section-3AA of the Sales Tax Act.                         26AA

12   Input Tax Adjustment in subsequent tax period
     The time limit for claiming input tax adjustment in
     the subsequent tax period has been limited to six
                                                                        Section-7
     months by substituting proviso to Section-7.
     Earlier this period was twelve months.

13   Adjustment on purchase of fixed assets
     The adjustment of Sales Tax on account of
     purchase of fixed assets has been proposed to be
     made in twelve equal monthly installments for all
                                                                      Section-8B
     registered persons. Earlier this condition was
     linked with the establishment of a „new unit‟,
     which has now been abolished.



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14   Concept of ‘Carry Forward’
     Registered persons engaged in making of taxable
     supplies other than zero-rated or exports have been
     allowed to carry forward excess input tax to the                   Section-10
     subsequent tax period, and they shall be entitled to
     claim refund in accordance with the procedure to
     be laid down by the Board through a notification.

15   Audit by the Sales Tax Department
     The Sales Tax officers have been empowered to
     conduct the audit of registered persons even if their
     audit had already been conducted by the office of
     the Auditor General of Pakistan in cases where the                 Section-25
     Collector had sufficient evidence that such
     registered persons were engaged in tax fraud /
     evasion.

16   Period for Revision of Sales Tax Return
     enhanced
     The period for revision of Sales Tax Return has                    Section-26
     been enhanced from existing 90 days to 120 days.

17   Abolishment of Penalty for non-filing of
     summary statement
     Requirement of filing of summary of sales and
     purchases has been withdrawn. Accordingly                          Section-33
     corresponding provision for levy of penalty on
     non-filing of summary statement has also been
     omitted.

18   Uniform Rate of Default Surcharge
     In order to keep the rate of default surcharge
     higher than the prevailing bank interest rates,
     uniform rate of default surcharge of 1.5% per
     month has been proposed. Earlier the rate of                       Section 34
     default surcharge for the first six months was 1%
     and thereafter 1.5% of the principal amount of tax
     due.

19   Extension in adjudication period
     The period within which the Collector (Appeal)
     shall decide an Appeal has been proposed to be
                                                                      Section-45B
     enhanced from existing 90 days to 120 days.




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20   Extension in time for decision of Appeal
     The period within which the Appellate Tribunal
     shall decide the appeal has been proposed to be                   Section-46
     enhanced from 180 to 240 days.

21   Monetary Limit for Single Bench enhanced
     The powers of the Single Bench of the Appellate
     Tribunal has been proposed to be enhanced to Rs
                                                                       Section-46
     10 million from Rs 1.5 million. The rationale is the
     brisk disposal of cases.

22   Chairman FBR empowered to Rectify ADRC’s
     Orders
     Chairman FBR has been proposed to be
     empowered to rectify the orders passed by the                   Section-47A
     ADR Committees. Earlier no such powers were
     available to the Chairman.

23   Concept of Representative of Registered Person
     & His Liabilities thereof Introduced
     The concept of representative of the registered
     persons has been proposed to be introduced by
                                                                   Section 58A&B
     inserting Section-58A to the Act and liabilities /
     obligations of the representative have been
     proposed in Section 58B.

24   Issuance of Duplicate Sales Tax Documents
     Fee for issuance of duplicate documents available
     with the department has been proposed to be                       Section-69
     enhanced from Rs 10/- to Rs 100/-.

25   Deletion of Items from Third Schedule
     Biscuits, confectionery, electric bulbs including
     energy saver lamps and snacks have been proposed
     to be excluded from the purview of Third Schedule
                                                                     3rd Schedule
     meaning thereby these items would be subject to
     Sales Tax under Standard Scheme instead of Retail
     Price.

26   Exemption to Packaged Edible Vegetables /
     Fruits
     Edible Vegetables / Fruits in packed form, earlier              6th Schedule
     subject to Sales Tax, have now been exempted.


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27   Exemption to Vegetable Oils, their fractions
     and margarine
     Vegetable Oils, their fractions and margarine have
     been exempted from Sales Tax by inserting their                6th Schedule
     PCT headings 1516.2020 and 1517.1000 against
     Serial No. 24 of Sixth Schedule.

28   Exemption to Ready-Mix Concrete Blocks
     The Ready-Mix Concrete Blocks have been
                                                                    6th Schedule
     proposed to be exempted from Sales Tax.

29   Exemption to Energy Saving Lamps
     A new Serial 41A is proposed to be introduced in
     the Sixth Schedule to the Act to exempt the energy             6th Schedule
     saver lamps from Sales Tax.

30   Exemption of Tax on goods supplied to
     hospitals
     By inserting clause 52A, supplies to hospitals and
     Charitable Institutions of or more than fifty beds             6th Schedule
     have been proposed to be exempted from Sales
     Tax

31   Exemption on goods / services purchased by
     non-resident entrepreneurs / traders
     This exemption has been provided on the basis of
                                                                    6th Schedule
     reciprocity to the foreign traders who purchased
     goods / services during his visit to Pakistan.




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                           FEDERAL EXCISE
32   Insertion of New Definitions
     Definitions of „duty due‟ and „franchise‟ have been
     proposed to be inserted in the Federal Excise Act,
     2005. Earlier the definition of franchise was given                 Section-2
     in Federal Excise Rules, 2005, which has now been
     made part of the Act.

33   Scope of Services
     The Scope of Services has been broaden by
     including the services originating from abroad and                  Section-2
     terminating in Pakistan.

34   Period for Revision of Federal Excise Return
     enhanced
     The period for revision of Federal Excise Return                    Section-3
     has been enhanced from 90 days to 120 days.

35   Single Return for the Composite Units
     The Composite Units were already filing a single
     return both for Sales Tax and Federal Excise
                                                                         Section-4
     purposes; however, legal cover has now been
     provided.

36   Applicability of Sales Tax Law
     The Federal Government has been empowered to
     borrow the provisions of Sales Tax to implement                     Section-7
     the Federal Excise law.

37   Uniform Rate of Default Surcharge
     In order to keep the rate of default surcharge higher
     than the prevailing bank interest rates, uniform rate
     of default surcharge of 1.5% per month has been
     proposed. Earlier the rate of default surcharge for                 Section-8
     the first six months was 1% and thereafter 1.5% of
     the principal amount of tax due. Identical
     amendments have been proposed in the Sales Tax
     Act, 1990.
38   Determination of Value
     Where goods are chargeable to duty at a rate
     dependent on their value, the value shall be                       Section 12
     determined in terms of Section-2(46) of the Sales
     Tax Act, 1990 excluding the amount of duty.

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     Earlier such value was the wholesale cash price of
     such goods.

39   Recovery of duty in case of collusion
     The period for recovery of Excise duty is proposed
     to be five years in cases where short payment of                   Section-14
     duty was the result of collusion or deliberate act.

40   Penalty for non filing of return
     In cases of non-fling of excise return, penalty is
     proposed to be five percent. Whereas in case of
     non-payment or short payment of duty, the penalty
     is proposed to be ten thousand rupee or five percent
                                                                        Section-19
     of the amount of tax whichever is higher of the
     duty due. However, in case of filing of return
     within fifteen days of the due date, penalty is
     proposed to be Rs. 100/- per day of default.

41   Extension in time for adjudication / appeals
     The period within which the adjudication officer /
     Collector (Appeals) shall decide the Show-Cause
                                                                    Section-31 & 33
     Notice / Appeal is proposed to be extended from 90
     to 120 days.

42   Extension in period to call the records
     The time limit to call for the record of any case by
     the Board is proposed to be extended to five years                 Section-35
     from the existing limit of two years.

43   Rectification of orders
     The period for rectification of errors by the Federal
     Government, the Board or any Federal Excise
                                                                        Section-36
     Officer is proposed to be extended to five years
     from the existing three years.

44   Chairman FBR empowered to Rectify ADRC’s
     Orders
     Chairman FBR has proposed to be empowered to
     rectify the orders passed by the ADR Committees.                   Section-38
     Earlier no such powers were available to the
     Chairman.

45   Issuance of Duplicate Sales Tax Documents
                                                                      Section-43A
     Fee for issuance of duplicate documents available

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     with the department is proposed to be Rs 100/- for
     each document.

46   Increase in the Rate of F.E.D
     Rate of excise duty is proposed to be enhanced
     from 15% to 16% only in respect of goods which                   1st Schedule
     were earlier chargeable to duty @ 15%.

47   Levy of excise duty on concentrate extracted
     from imported juices
     The scope of chargeability of Excise duty is
     proposed to be extended to the imported juices or
     pulp of imported vegetables, food grains or fruits
                                                                      1st Schedule
     by omitting the word “indigenous” from Serial No.
     6 of Table 1 to the First Schedule to the Federal
     Excise Act, 2005 subject to the conditions laid
     therein.

48   Excise Duty on Cigarettes
     The modality to collect excise duty on cigarettes is
     proposed to be changed and Serial No. 9, 10 & 11                 1st Schedule
     are proposed to be substituted accordingly.

49   Excise Duty on Cement
     F.E.D on cement is proposed to be enhanced from
     seven hundred and fifty rupee per metric ton to                  1st Schedule
     Nine hundred per metric ton.

50   Excise Duty on Motor Vehicles
     Excise duty @ 5% of the value is proposed to be
     collected on vehicles exceeding engine capacity of               1st Schedule
     850 CC.

51   Enhancement of Excise Duty on Services
     Services such as advertisement on CCTV, Cable
     TV Network, Inland carriage of Goods by air,
     services provided by shipping agents which were
     subject to excise duty @15% of their value are now               1st Schedule
     proposed to be subject to 16% rate of duty.
     Whereas F.E.D on all sort of telecommunication
     services is proposed to be enhanced from 15% to
     21%.
52   Enhancement of Excise Duty on Air Travel
                                                                      1st Schedule
     Rate of Excise Duty on air travel has been


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     enhanced by substituting Serial No. 3 of Table-II to
     the First Schedule to the Federal Excise Act, 2005.

53   Enhancement of Excise Duty on Insurance
     Services
     Rate of Excise Duty on Insurance services is
     proposed to be enhanced from 5% to 10%.
                                                                      1st Schedule
     Similarly non-fund services provided by banking or
     non-banking companies would be subject to 10%
     Excise Duty instead of 5%.

54   Enhancement of Excise Duty on Franchise Fee
     Rate of Excise Duty on Franchise Services is                     1st Schedule
     proposed to be enhanced from 5% to 10%.




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                           NOTIFICATIONS


CUSTOMS:

S.R.O. 559(I)/2008
Import of Specified raw-materials has been allowed for the manufacture of
toilet and laundry soap to the industrial units located in the state of Azad
Jammu and Kashmir.

S.R.O. 561(I)/2008, S.R.O. 562(I)/2008 and S.R.O. 563(I)/2008
These S.R.O.s dealing with Tariff Based System (TBS) for the automotive
Sector, have amended the earlier notifications viz. S.R.O. 693(I)/2006, S.R.O.
655(I)/2006 and S.R.O. 656(I)/2006 respectively. Rate of duty laid down in
the table to S.R.O. 656(I)/2006 at S.No. 6 has been reduced from 35% to
32.5% and at S.No. 9 from 25% to 20%. Through S.R.O. 562(I)/2008, an
amendment has been made in S.R.O. 655(I)/2006 bringing rate of duty on
components for fully CNG dedicated vehicles 8702 from 10% to 0%. Rate of
duty has been reduced from 15% to % on fully dedicated CNG buses imported
in CBU condition (PCT heading 8702.1020). Rest of the amendments are not f
substantive nature.

S.R.O. 564(I)/2008
This S.R.O. has amended S.R.O. 567(I)/2006 dated 05.6.2006. The former
notification granted concessionary rate of duty on a large number of items
subject to certain conditions. Following are some of the major changes in the
said notification:

        Time limit (upto 30th June 2008) laid down for M/s PTA Ltd. for
         the import of raw-materials viz. Para-xylene and Acetic Acid
         importable at 0% has been deleted.
        PTA can now be imported at 7.5% rate of duty instead of 15%
         w.e.f. 1st July, 2008.
        Na Fe EDTA (Vitamin mineral premix) is now subject to 0% duty.
        BOPP packing adhesive tape (3919.9090) jumbo roll having
         minimum 100 cm width and weight exceeding 100 kg per roll is
         now subject to 15% duty.
        Certain amendments have been made in Table-III (at S.No. 64 to
         71 of amending S.R.O.) by adding some new drugs importable @
         0%.
        PVC / PVDC (pharmaceutical grade (3900.4990) has been added at
         S. No. 95 under the Caption “Packing Material”.


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AMENDMENT IN S.R.O. 565(I)/2006
Following new industries have been added to provide concessionary rate of
duty on their imported raw materials / components:

       i.       Fortified Rosin
       ii.      Laminated Board
       iii.     Water Dispenser
       iv.      Central Heating Gas Boiler
       v.       Gas Heater
       vi.      Gas Stoves / Cooking Ranges with Oven
       vii.     Aluminum Alloy
       viii.    Electric Iron
       ix.      Mini Chopper
       x.       Vacuum Cleaner
       xi.      Mini Oven
       xii.     Nickel Rotary Printing Screens
       xiii.    UPS
       xiv.     CD and DVD industry added
       xv.      Packaging Industry for dairy and juices
       xvi.     Motor Cycle Chain Industry added
       xvii.    Acrylic / Pigment Thickener (More Raw materials added)
       xviii.   Perforated Steel Industry added

In the case of existing industries already eligible for concessionary rates,
following further concessions has been granted:

       i.       For an air conditioner industry, concessionary rate of 5% duty
                has now been extended to Hot Rolled Steel Sheets and Cold
                Rolled Steel Sheets as well in addition to Aluminum tube in
                coils. The same concession has also been granted to deep
                freezers and Chest Coolers, Refrigerators / VisiCoolers,
                Washing Machines.
       ii.      Some more raw materials have been allowed concessionary rate
                for car air conditioner manufacturers e.g. fans net filter, core
                sub-assembly heater, filter drier etc.
       iii.     Chrysotile Cement pipes sheets and fittings industry has been
                added to the notification allowing 5% rate on the import of
                Chrysotile asbestos as its raw material.

Minor amendments have been made in the list of raw materials for the
following manufacturing industries:


       i.       Evaporators and Condensers for air conditioners

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       ii.     Articles of Stationery
       iii.    Bolts, nuts, screws, concrete nails and blind rivets.
       iv.     Cables and conductors (PP Film / filler/ tape, malinex tape, PP
               film, polypropylene tape, Twin Yarn –have been added].
       v.      CNG Dispensers Manufacturing Industry (Selector Switch,
               emergency push button, coalescing, filter and housing and non
               Return Valve – have been added).
       vi.     CNG Kits:
               Components of filling Valves / components of Non-Return
               Valves and Inlet Gas Group and Patentio meter parts – have
               been added.

       vii.    Disposable Infusion Giving Sets and anti – disposable syringes
               – added.
       viii.   Pigment industry added to existing Dyestuff Industry –further
               adding Non-ionic Surface Active Agent in the raw-materials
               list.
       ix.     Distilled Fatty Acid (of Soybean, palm and coconut oils) added.
       x.      Paper and paper board industry
       xi.     Hooks and eyes and air air-handling equipments.
       xii.    Concessionary rate of duty on raw-materials for laundry soap
               industry has been enhanced from 5% to 10%.
       xiii.   Viscose Staple Fibre.
       xiv.    Aluminum Processing Industry
       xv.     Fans
       xvi.    Changes in Transformer industry (more raw materials /
               components added).

AMENDMENT IN S.R.O. 575(I)/2006
S.No. 11 of the Table to the S.R.O.-575(I)/2006 has been amended – now –
allowing the concessionary rate of 5% duty available to power generation
projects based on oil, coal, gas, wind and wave energy to primary contractors
of the project as well on fulfillment of certain conditions.

Condition (1) laid down in S.R.O. 575(I)/2006 whereby import substitutes of
locally manufactured machinery was not entitled for concessionary rate of
duty, has been amended. Now, machinery for projects worth 50 million Us
dollars (C&F Value) have been exempted from this condition in addition to
agricultural machinery and machinery for development of grain handling and
silos.

Concession on prefabricated buildings and sheds vide S.No. 34 has been
withdrawn.
REGULATORY DUTY ON AUTO VEHICLE PARTS

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Regulatory duty on automotive vehicles parts / components notified vide
S.R.O. 693(I)/2006 dated 1st July, 2006 has been raised from 15% to 17.5%
meant for vehicles of PCT heading 8703 and from 20% to 30% on
components for motor cycles.

MAJOR CHANGES IN THE RATES OF CUTOMS DUTY IN 1ST
SCHEDULE TO THE CUSTOMS ACT, 1969

 - CUSTOMS DUTY ON CARS
Rate of duty on cars / vehicles exceeding 1800 cc falling under PCT heading
8703.2329, 8703.2490, 8703.3223 (i.e. SUVs 4 x 4), 8703.3225 (All terrain
vehicles 4 x 4) has been raised from 90% to 100%.

 - CUSTOMS DUTY ON SOAP AND SHAMPOOS
Customs duty on all varieties of soaps and shampoos besides other
preparations for use on the hair has been increased from 25% to 35% with
immediate effect (PCT headings 34.01 and 33.05). Likewise duty on beauty or
make up preparations and preparations for the care of the skin (33.04),
preparations for oral or dental hygiene (33.06), preshave, shaving and after
shave preparations (33.07) also attract 35% duty rate.

 - CUSTOMS DUTY RAISED TO 35% ON SO-CALLED LUXARY
ITEMS
Customs duty has also been increased to 35% on the following items:
    i.    Bakery items, cereals (1904), other prepared foodstuff of Chapter
          20 (20.01, 20.02, 20.03, 20.05, 20.06, 230.07, 20.09)
    ii.   Food preparations of Chapter 21 such as sauces, ketchups, soups,
          ice cream and other foods preparations including aerated
          beverages.
    iii.  Fruit items of Chapter-8 such as grapes, apples, apricots, citrus
          fruit, melons etc.
    iv.   Dairy products (e.g. butter, cheese, yogurt etc.
    v.    Tiles, cubes and similar articles (69.08), ceramic sinks, wash
          basins, bidets, urinals etc of heading 69.10.
    vi.   Ceramic tableware, kitchenware and other house hold and toilet
          articles of heading 69.11 and 69.12, statuettes (69.13) and other
          ceramic articles of heading 69.14.
    vii.  Articles of Marble, travertine, and alabaster (6802.2100 to
          6802.9900)
    viii. Cigars, Cheroots, Cigarillos and cigarettes (24.02), smoking
          tobacco, tobacco for chewing (24.03).




                                        MASOOD AZIZ & ASSOCIATES
                                         An Advisory Service of Customs, Sales Tax, Federal
                                         Excise & W.T.O Matters
                                                                       Page 19 of 26


DUTY ON AUTOMOTIVE VEHICLES
Rates of Customs duty on old and used automotive vehicles prescribed in US$
have been enhanced by an amendment in S.R.O. 577(I)/2005 vide S.R.O.
560(I)/2008.




                                        MASOOD AZIZ & ASSOCIATES
                                        An Advisory Service of Customs, Sales Tax, Federal
                                        Excise & W.T.O Matters
                                                                          Page 20 of 26




SALES TAX:

S.R.O. 523(I)/2008: (Rescission of S.R.O. 645(I)/2007)
Through this notification the Federal Government has rescinded S.R.O.
645(I)/2007. Earlier the Federal Government had imposed two percent Sales
Tax on imports by commercial importers through the rescinded notification.
As the provision of this two percent sales tax has now been introduced in the
Special Procedure for “Payment of Sales Tax on account of Minimum Value
Addition” by making an amendment in Sales Tax Special Procedure Rules,
2007 by S.R.O. 525(I)/2008, therefore, there was no need to keep a separate
notification.

S.R.O. 524(I)/2008: (General amnesty for unregistered persons)
This notification grants general amnesty for the un-registered persons who
were otherwise liable to registration in respect of supplies made by them prior
to 11th June 2008. Some conditions have been laid down in this notification
which inter-alia includes that such unregistered persons shall apply for
registration between 1st June 2008 to 31st July 2008. However, this notification
shall not apply to the persons against whom cases of tax fraud have already
been framed.

S.R.O. 525(I)/2008: (Amendment in Special Procedure Rules, 2007)
This notification has amended Sales Tax Special Procedure Rules 2007 and
these amendments shall take effect from 1st July 2008. The procedures in
respect of which amendments have been made interalia include “Special
Procedure for Payment of Sales Tax by Commercial Importers”, “Special
Procedure for Payment of Sales Tax by the Manufacturers of Biscuits,
Confectionary and Snacks”. Further Special Procedure for Payment of Sales
Tax by Wholesale-cum-Retailer and “Special Procedure for Payment of Extra
Sales Tax on Specified Electric Home Appliances” has been introduced.

S.R.O. 526(I)/2008: (Refund Notifications Rescinded)
This notification has rescinded “Refund of Sales Tax on Export of Specified
Goods Rules, 2006 and Processing of Refund Claims of Large Taxpayers
Rules, 2007”. Now the refund claimants of five export sectors and the units
registered in the Large Taxpayer Units shall file their refund claims under the
Sales Tax Refund Rules notified vide S.R.O. 555(I)/2006 Dated 05.06.2006
and appropriate amendments has been made in the said Rules to entertain the
refund claims of the exporters of specified goods and the units registered
under the Large Taxpayer Units.




                                           MASOOD AZIZ & ASSOCIATES
                                           An Advisory Service of Customs, Sales Tax, Federal
                                           Excise & W.T.O Matters
                                                                           Page 21 of 26


S.R.O. 527(I)/2008: (Rescission of S.R.O. 543(I)/2006)
This notification has rescinded S.R.O. 543(I)/2006 in terms of which the
registered persons of sectors mentioned therein were required to submit their
production / supply data in the format given in the notification. Now this
requirement has been abolished by rescinding the notification of 2008.
However, the registered person filing data under the S.R.O. 543(I)/2006 shall
file production / supply data for the month of June 2008 as the rescinding
notification has been given effect from 1st July 2008. Needless to mention that
the detail of production / supply data shall be submitted along with the Sales
Tax Return as the same has suitably been amended for the this purpose.

S.R.O. 528(I)/2008: (Rescission of S.R.O. 559(I)/2006)
This notification has rescinded S.R.O. 559(I)/2006 which required the filing of
monthly summary of purchases and sales by the registered persons except the
five export sectors who were excluded from the scope of this notification.
Now the registered persons would file the summary of purchases and sales
along with the Sales Tax Return as the same has suitably been amended for the
this purpose.

S.R.O. 529(I)/2008: (Amendment in S.R.O. 647(I)/2007)
This notification has amended the Table to the S.R.O. 647(I)/2007. S.R.O.
647(I)/2007 mentions certain sectors to whom the provisions of Section 8B
(which restrict the claim of input sales tax to the extent of 90 % of output tax)
shall not apply. Now the Table to the 2007 notification has been amended to
incorporate the changes made by the Finance Bill 2008, Sales Tax Special
Procedures and Sales Tax Rules by the notifications issued in this regard.

S.R.O. 530(I)/2008: (Amendment in Sales Tax Rules, 2006)
This notification has made certain amendments in Sales Tax Rules, 2006
notified vide S.R.O. 555(I)/2006. The major amendments made vide this
notification relate to Registration, Return filing, processing of refund claim by
the exporters of specified goods & the refund claims by the units registered in
the Large Taxpayer Units and Sales Tax Registration / De-registration.

S.R.O. 531 & 532(I)/2008: (Fixation of value of supply of locally produced
coal)
Through S.R.O. 531(I)/2008, S.R.O. 544(I)/2006 fixing the value of supply of
locally produced coal has been rescinded. Earlier the value of supply of locally
produced coal was fixed at Rs. 670/- per metric tonne. However, through
S.R.O. 532(I)/2008 the value of supply of locally produced coal has been fixed
at Rs. 1000/- per metric tonne.




                                           MASOOD AZIZ & ASSOCIATES
                                            An Advisory Service of Customs, Sales Tax, Federal
                                            Excise & W.T.O Matters
                                                                          Page 22 of 26


S.R.O. 533 & 536(I)/2008: (Exemption on ingredients of pesticides)
Through S.R.O. 533(I)/2008 the Federal Government has rescinded its earlier
notification i.e. 645(I)/2006 which granted exemption of sales tax on
ingredients of pesticides. Now a new notification i.e. S.R.O. 536(I)/2008 has
been issued wherein exemption of sales tax on active ingredients of pesticides
has been given to provide low price pesticides to the farmers to increase the
agricultural produce of the country.

S.R.O. 535(I)/2008: (Exemption to Fertilizers)
Through this notification the Federal Government has exempted the fertilizers
given in the Table to the notification from payment of sales tax. The rationale
is to reduce low cost fertilizers to the farmers for enhancement of agricultural
produce of the country.

S.R.O. 537/2008: (Higher Rate of Sales Tax)
Through this notification amendments have been made to give effect to the
general increase of 1% in the rate of sales tax to the goods, which were earlier
subject to higher rate of sales tax of 17.5 & 20 percent. Now the goods which
were subject to sales tax @ 17.5% would be subject to 18.5% and goods
which were subject to 20% would be subject to 21%.

S.R.O. 538/2008: (Amendments in S.R.O. 509(I)/2007)
This notification has substituted, omitted and added certain entries / PCT
Headings to rationalize the zero-rating of sales tax on inputs used by the five
major export sectors i.e. Leather, Textile, Carpets, Sports Goods & Surgical
Goods.

S.R.O. 541 & 542(I)/2008: (Withdrawal Exemption of sales tax on Mobile
Phone Sets)
Through S.R.O. 541(I)/2007, the Federal Government has rescinded its earlier
notification namely S.R.O. 541(I)/2006 which granted exemption of sales tax
& custom duty on Cell phones. Now a new notification S.R.O. 542(I)/2008
has been issued and sales tax over and above Rs. 500/- per set has been
exempted. However, this tax of Rs. 500/- is not collectible at the time of
import rather at the time of activation of the set by the cellular company
operator subject to the terms and conditions laid down in the notification.

S.R.O. 548(I)/2008: (Rescission of Notifications)
This notification has rescinded twelve notifications issued in the past by the
Federal Government as these notifications have either been merged and single
notification has been issued or the impact of these notification has been given
by making suitable amendments in the existing notifications.




                                           MASOOD AZIZ & ASSOCIATES
                                           An Advisory Service of Customs, Sales Tax, Federal
                                           Excise & W.T.O Matters
                                                                          Page 23 of 26


S.R.O. 549(I)/2008: (Zero-Rating Of Sales Tax)
Through this notification individual notifications granting zero-rating of sales
tax to various sectors / goods has been consolidated and individual
notifications have been rescinded.

S.R.O. 550(I)/2008: (Rescission of Notifications)
This notification has rescinded the individual notifications which granted zero-
rating of sales tax to different sectors / goods and a consolidated notification
i.e. S.R.O. 549(I)/2008 has been issued.

S.R.O. 551& 552(I)/2008: (Exemption From Payment Of Sales Tax)
S.R.O. 551(I)/2008 has been issued to consolidate the individual notifications
through which exemption from payment of sales tax was granted under
Section 13 of the Sales Tax Act, 1990. Consequently the individual
notifications have been rescinded.




                                           MASOOD AZIZ & ASSOCIATES
                                           An Advisory Service of Customs, Sales Tax, Federal
                                           Excise & W.T.O Matters
                                                                           Page 24 of 26



FEDERAL EXCISE:

S.R.O. 543(I)/2008: (Applications of the provisions of Sales Tax Act, 1990)
Through this notification the provisions of certain sections of Sales Tax Act,
1990 have been borrowed for the purpose of enforcement of Federal Excise
Act, 2005.

S.R.O. 544(I)/2008: (Filing of Returns by airlines for carriage of goods)
Through this notification a new paragraph has been added to S.R.O.
550(I)/2006 requiring the airlines to file return for carriage of goods according
to Sub-rule 9 of Rule 41A of the Federal Excise Rules, 2005 which requires
the airlines to file their returns by the 15th of the following second month.

S.R.O. 546(I)/2008: (Amendment in Federal Excise Rules, 2005)
Through this notification the Federal Board of Revenue has made certain
amendments in the Federal Excise Rules, 2005 especially with regard to the
levy of Federal Excise Duty on franchise fee especially authorizing the banks
to deduct the Federal Excise Duty where it is satisfied that franchise fee or
royalty was remitted but the Duty levialbe thereon was not deposited in
accordance with the procedure given therein.




                                           MASOOD AZIZ & ASSOCIATES
                                            An Advisory Service of Customs, Sales Tax, Federal
                                            Excise & W.T.O Matters
                                                                         Page 25 of 26



                             DECLARATION

       Clause-8(8) of the Finance Bill, 2008 has been given effect from 12th
June, 2008 by Declaration under the Provisional Collection of Taxes Act,
1931 (XVI of 1931) meaning thereby that only changes in 1st Schedule to the
Customs Act, 1969 (i.e. Pakistan Customs Tariff), will be effective from 12th
June, 2008. Whereas the rest of the changes (such as changes in the rates of
Sales Tax and Federal Excise Duty and other amendments in Customs Act,
1969) shall take effect from 1st July, 2008.

      However, the Sales Tax and Federal Excises notifications shall have
immediate effect except the following wherein it has specifically been
mentioned that these shall take effect from 1st of July, 2008:

S.R.O. 523((I)/)/2008        S.R.O. 525((I)/)/2008
S.R.O. 526((I)/)/2008        S.R.O. 527((I)/)/2008
S.R.O. 528((I)/)/2008        S.R.O. 530((I)/)/2008
S.R.O. 537((I)/)/2008        S.R.O. 551((I)/)/2008
S.R.O. 552((I)/)/2008




                                         MASOOD AZIZ & ASSOCIATES
                                          An Advisory Service of Customs, Sales Tax, Federal
                                          Excise & W.T.O Matters
                                                                             Page 26 of 26



             BRIEF INTRODUCTION OF THE COMPANY
An advisory service for indirect tax consultancy, Masood Aziz & Associates
works to meet the specialized needs of its clients by providing expertise in
Customs Law, Intellectual Property Rights, WTO matters, Sales Tax & Federal
Excise Law and Tariff Anomalies.

We offer consultancy services on a retainer-ship basis, in addition to representing
corporate clients at quasi-legal fora such as Customs, Sales Tax and Excise
Tribunals as well as at High Courts of the country. Since 1999, we have been
working with some of the biggest companies in Pakistan and offering our
expertise in indirect tax laws and regulations. Masood Aziz & Associates has also
spearheaded and successfully completed two projects on international trade
transaction analysis that were awarded by the United Nations Conference on
Trade and Development (UNCTAD) and the Government of Pakistan.

Details of services offered by us are available at our website:
                            www.masoodaziz.com

Our major clients include:
     Ahbab Associates                                  Karam Ceramics Limited
     Alucan (Pvt.) Limited                             Kaypee International
     Artistic Apparel (Pvt.) Limited                   LR Pakistan (Pvt.) Limited
     Artistic Denim Mills Limited                      Lucky Cement Limited
     Artistic Fabrics (Pvt.) Limited                   Merin (Pvt.) Limited
     Artistic Garment Industries (Pvt.) Ltd            New Allied Electronic Ind. Pvt.
     Artistic Milliners Limited                        Ltd.
     Associated Constructors Limited                   Pak Arab Refinery Company
     Berger Paints Pakistan Limited                    Pakistan Cables
     Buksh Industries (Pvt.) Limited                   Pakistan Beverages Limited
     Buksh Manufacturing Corp.                         Procter & Gamble Pakistan (Pvt.)
     Continental Biscuits Limited                      Ltd.
     Coastal Synthetics (Pvt.) Limited                 Rousch Power Pakistan Limited
     Ecopack Limited                                   Ruby Traders
     Em-Aey Enterprises (Pvt.) Limited                 Shahi Enterprises
     Fateh Motors Limited                              S. G. Fibre Ltd.
     Fateh Textile Mills Limited                       Sapphire Textile Mills Limited
     Feroze Textile Industries                         Siddiqsons Tin Plate Ltd.
     Gadoon Textile Mills Limited                      Shahi Enterprises
     Ghazi Brothers                                    Stiefel Labs. Pakistan (Pvt.) Ltd.
     Gillette Pakistan (Pvt.) Limited                  Tapal Tea (Pvt.) Limited
     Huffaz Seamless Pipe Ind. Ltd.                    Tessori Trading Co. (Pvt.) Ltd.
     Hinopak Motors Limited                            Tri-Pack Films Limited
     Huawei Tech. Pakistan (Pvt.) Ltd.                 Younus Textile Mills Limited
     Image Graphics (Pvt.) Ltd.                        Zain Enterprise
     Indus Motor Company




                                              MASOOD AZIZ & ASSOCIATES
                                              An Advisory Service of Customs, Sales Tax, Federal
                                              Excise & W.T.O Matters

								
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