Islamabad: The government in Budget 2019-20 has decided to discontinue the zero-rating facility for the five export-oriented sectors, a news source reported.
These sectors include textiles, carpets, sports goods and surgical goods. A 17% Sales Tax has now been imposed on these sectors.
The Minister of State for Revenue Hammad Azhar said during the budget speech that the objective of the facility was to resolve delays in refund payments. However, zero-rating has created a loophole and the benefit is being availed by unintended beneficiaries.
Zero-rating of utilities (gas, electricity and fuels) allowed to these export-oriented sectors through various sales tax general orders will also be withdrawn.
Instead of zero-rating, the government has promised speedy refund claims against actual exports. The refund of sales tax to these sectors will be automated. This will ensure that the sales tax paid on inputs is immediately refunded.
From sales taxes, the government is expecting to raise PKR 250 billion as incremental revenue, via GST rate adjustments in various areas and the elimination of zero-rating.
