Omission stalls sales tax payment by flour industry

Reason said to be FBR’s omission of HS code in budget document

LAHORE: The flour industry is facing a crisis-like situation regarding payment of sales tax as the Federal Board of Revenue (FBR) omitted printing the HS code in Schedule 6 of the General Sales Tax in the federal budget 2019-20.

The FBR and the finance ministry said that a paragraph was added regarding amendments to Schedule 6 of the GST-exempted items.
The board said flour and refined flour being sold in retail were exempted from sales tax but due to negligence, the HS code: 1101.0010, was removed from Schedule 6.

The unmentioned code and lack of explanation of word “retail” has been the actual cause for the ongoing crisis. The FBR did not clarify the specific quantity falling under “retail”.
Sources said the government officials have been informed about the error.

The FBR is likely to issue a written explanation regarding the code within the next 48 hours.

This time, 17% sales tax has been imposed on choker (low quality flour) in the Sales Tax Act. The commodity’s HS Code: 2302.3000, has been mentioned in the act.

Now after the imposition of 17% sales tax and the surge in price of choker, the cost of flour will also rise. The government sets the price of choker, while fixing the price of flour.

If the government decides to withdraw the sales tax, it will have to issue a Statutory Regulatory Order (SRO).