[siddiquehabib]

ISLAMABAD (April 02 2006): The Central Board of Revenue (CBR) has fixed Rs 29 per kg as value of taxable supply of locally produced white crystalline sugar for assessment of sales tax. The CBR notified the decision through SRO 315(I)/2006 on Saturday.

According to another notification, SRO 314(I)/2006, the CBR has also fixed $440 per metric ton (PMT) as value of white crystalline sugar for calculation of sales tax at import stage.

The decision would be applicable on imported sugar falling under the Pakistan Customs Tariff (PCT) heading 1701.9910 and 1701.9920 of the First Schedule of the Customs Act, 1969.

Official sources told Business Recorder that the CBR has introduced 'deemed price mechanism' for fixation of the value of sugar. The manufacturers have to pay sales tax at the rate of Rs 4.35 per kg on local supply of sugar. However, the commercial importers will have to pay sales tax on the basis of $440 per metric ton. In case of importers also, the incidence of sales tax comes to Rs 4.35 per kg.

Officials said that the incidence of sales tax has been rationalised for both imports and local supply of sugar. This is for the first time that the 'deemed price mechanism' has been used for fixation of the value of sugar for calculation of sales tax. Previously, there have been instances when incidence of sales tax at local stage was more than the import stage. Thus, tax incidence has been rationalised so that sales tax per kg should be the same, both in the case of local supply and import.

If the fixed price of $440 per metric ton of sugar is converted into local rupees, then the sales tax comes to Rs 4.35 per kg. However, 10 percent minimum value-addition, mandatory for commercial importers, is also taken into account for calculation of sales tax at the import stage.