The ordinance seeks to amend Sales Tax Act, 1990 and shall come in force at once

Sugar Sector:

SRO.564(I)/2006 dated 5th June, 2006 has been rescinded vide SRO.232(I)/2011. Currently, sales tax on white crystalline sugar was being charged at Rs. 29 per kg irrespective of the value at which the supply is made. Hence forth this practice has been done away with and the sales tax will be charged at actual market price of sugar.
The above amendment has a dual impact on the sugar pricing mechanism. Firstly, the determination and verification of the actual market price for the purpose of levy of sales tax will be difficult as sales contracts are made depending on the date of supply and terms of payments. Secondly, in order to minimize the impact of sales tax on price the seller and buyer will be prone to restrict the price to a minimum possible amount; at least on paper.
Furthermore, this may have snow ball impact if the seller is required to charge sales tax on the market price at each exchange of hands.

SRO.509(I)/2007 DATED 9TH June, 2007 deals mainly with 141 items in five sectors viz. textile, leather, surgical, sports and carpets on which sales tax was being charged at the rate of zero percent on the supply and import. Now vide SRO. 231(I)/2011 dated 15th March, 2011 these have been subject to a condition that these will only be charged at zero rate if these goods after import or domestic production are sold or purchased between persons registered as manufacturers-cum-exporter or as exporter for use or utilization in goods meant for export. Thus domestic supplies of all these goods will now subject to levy of sales tax at standard rate of 17%.
If we analyze the above amendment in its historical context then it would mean that either a declaration will be required stating that the goods sold/purchased , after import or domestic productions,  shall meet the criteria set forth in the SRO or the exporter will be claiming refund after the goods have been exported. In both of the cases various complications will be involved.

SRO 549(I)2008 has been amended vide SRO230(I)/2011 dated March 15, 2011 whereby entries at serial number 3 in the above SRO has been omitted. The impact of the above amendment is to levy sales tax on plant, machinery and equipment (excluding consumer durables and office machines) both imported and locally manufactured.

Vide SRO. 229(I)/2011 dated March 15, 2001 following SRos have been rescinded:

1. SRO.535(I)/2008, Dated 11TH June, 2008 -  exempted import and supply of fertilizers from payment of sales tax (the SRO included items under 24 categories)
2. SRO.536(I)/2008, Dated 11th June, 2008 - exempted import and supply of pesticides and their active ingredients  from payment of sales tax (the SRO included items under 76 categories)
3. SRO. 706(I)/2010, Dated 2nd August, 2010 - exempted agricultural tractors from payment of sales tax

The impact of the above is levy of 17 % sales tax on the above items with immediate effect.

 In case of Federal Excise Act, 2005 the rate for the levy of the federal excise has been enhanced from 1% to 2.5% with immediate effect.

In the Income Tax Ordinance an amendment has been made whereby a surcharge has been levied which shall be payable by every taxpayer at the rate of 15% of the tax payable along with regular tax payments including advance tax payments, tax deductions at source, etc . as per part V of Chapter X and transitional advance tax provisions under Chapter XII from section 231A to section 236 i.e. deductions on cash withdrawals from a bank, purchase of motor cars and jeeps, brokerage and commission, collection of tax by stock exchanges, transport business, CNG stations, Electricity Consumption, Telephone Users.
 The levy is for the period commencing from March 15, 2011 to June 30, 2011.
This surcharge shall not be payable for the tax year 2010 and prior years.

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