LAHORE - The federal government will abolish the concessions and exemptions available under SRO 565(1)/2006 to several sectors including zero rating of poultry industry. Official sources said that the government would reduce the number of general tariff slabs from five to four, reviewing all concessionary Statutory Regulatory Orders (SROs) of customs duty and other concessionary notifications for reduction of customs duty on different sectors in budget (2016-17).

The number of general tariff slabs was reduced from 6 to 5 in last budget which would further come down from 5 to 4 in coming budget.

Sources said that the government has decided to review sales tax/customs duty structure on steel sector and propose amendments to existing procedures and rules in consultation with the steel and ship breaking industries in the upcoming budget. The FBR has notified constitution of a committee to submit budget proposal for steel sector. The committee's recommendations would be incorporated in budget (2016-17).

Sources said that the third phase of SROs withdrawal is expected to take away most of the concessions and reduced rates of duty available under said customs SROs.

In last budget, the concessions and exemptions available under SRO 565(1)/2006 were revisited and the same were either withdrawn or maintained by reducing the extent of concessions.

Meanwhile, Pakistan Poultry Association (PPA) has said that proposed levy of Sales Tax on processed chicken products will adversely affect consumers and only the unorganized sector will be benefitted.

In a letter to Chairman Federal Board of Revenue (FBR), Chairman PPA Khalid Salim Malik stated that the local producers are faced with payment of import duties and sales tax on inputs of producing processed chicken products, therefore, the added sales tax would cause a grievous injury to the small limited processing sector.

Chairman PPA said the provision of zero rating provided to poultry processing sector served as an impetus to enhance processing. ‘But the provision of zero rating was withdrawn in 2013-14 which once again increased the gap between the cost of production of the wet market vis-à-vis the poultry processing sector,’ Khalid said.

It is to be noted that in UK, as per VAT Act of 1994, Schedule 8 Group 1 all food items for human consumption are zero rated. Not only poultry and poultry products in all forms are zero rated but also food/feed for poultry and game birds is zero rated. Since EU is one market, all tariffs are mostly common.

On the other hand, he added, sales tax exemption will expand the poultry processing to yield additional Rs 3.8 billion. ‘Given the encouragement from the government, the association is aiming to move at least another 8% additional birds of the total live bird production, i.e. 81.6 million birds, into the processing sector, which would mean that a bird which is generating an undocumented sales revenue of Rs 230 would be generating a documented sales revenue, after value addition, of Rs 531/Kg, thereby yielding a revenue for the exchequer by way of income tax of approximately Rs 3.80 billion based on the available data from the case study of our member,’ added Khalid.