Supersession of Notification No. SRO 1012(I)/2011 and introduction of scheme of zero rating of five major export oriented sector as it was earlier introduced under SRO 283(I)/2011, dated 1st April, 2011.

GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTICS AND REVENUE (REVENUE DIVISION) ********* Islamabad, the 23rd November, 2011. NOTIFICATION (SALES TAX) S.R.O. 1058 (I)/2011.- In exercise of the powers conferred by clause (c) of section 4 read with clause (b) of sub-section (2) and sub-section (6) of section 3, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13 and section 71 of Sales Tax Act, 1990, and in supersession of its Notifications. No. S.R.O. 1012(I)/2011, dated the 4th November, 2011, the Federal Government is pleased to notify the goods specified in column (2) of the Table below under the PCT heading numbers mentioned in column (3) of the said Table, to be the goods on which sales tax shall, subject to the conditions stated in this notification, be charged at the rate of zero percent on the supply and import thereof, or at reduced rate of sales tax of six percent or, as the case may be, at four percent as specified in the said conditions, namely:- TABLE S # Description of goods PCT heading No. (1) (2) (3) 01. Leather and articles thereof including artificial leather 41.01 to 41.15, 64.03, footwear 64.04, 6405.1000, 6405.2000 and other respective headings 02. Textile and articles thereof excluding monofilament, sun Chapter 50 to Chapter 63 shading, nylon fishing net, other fishing net, rope of and other respective polyethylene and rope of nylon, tyre cord fabric headings excluding 5407.2000, 5608.1100, 5608.1900, 5608.9000. 03. Carpets 57.01 to 57.05 04. Maize (corn) starch 1108.1200 05. Mucilages and thickness, whether or not modified, derived 1302.3210, 1302.3290, from locust beans locust bean seeds or guar seeds 1302.3900 06. Sports goods 9504.2000, 9506 and other respective headings 07. Surgical goods Respective headings 08. Emery powder/grains 2513.2010 09. Magnesium oxide 2519.9010 10. Coning oil 2710.1991 11. Spin finish Oil 2710.1998

12. Antimony oxide 2825.8000 13. Sodium bromate 2829.9000 14. Sodium sulphide and sodium hydrogen sulphide 2830.1010, 2830.1090 15. Sodium dithionite 2831.1010 16. Sodium sulphite and sodium hydrosulphide 2832.1010, 2832.1090 17. Phosphinates (hypophosphites) and phosphonates 2835.1000 (phosphates) 18. Sodium dichromate 2841.3000 19. Hydrogen per oxide 2847.0000 20. p-Xylene 2902.4300 21. Trichloroethylene 2903.2200 22. Ethylene Glycol (MEG) 2905.3100 23. Di-ethylene glycol 2909.4100 24. Ethyl glycol 2909.4490 25. Tri-ethylene Glycol 2909.4990 26. Glutar aldehyde 2912.1900 27. Formic acid 2915.1100 28. Sodium formate 2915.1210 29. Acetic acid 2915.2100 30. Sodium acetate 2915.2930 31. Acrylic acid and its salts 2916.1100 32. Esters of Methacrylic acid 2916.1400 33. Oxalic acid 2917.1110 34. Pure terephthalic acid (PTA) 2917.3610 35. Glycolic acid and their esters 2918.1800 36. Other phosphoric esters and their salts 2919.9090 37. Dyes intermediates 2921.0000 2922.0000 2923.0000 2924.0000 2927.0000 2933.0000 2934.0000 38. DMF (Dimethyl Formamide) 2924.1990 39. Acrylonitrile 2926.1000 40. Other organic derivatives of hydrazine or of hydroxylamine 2928.0090

41. Tanning extracts of vegetable origin; tannins and their 3201.1000 salts, ethers, esters & other derivatives 3201.2000 3201.9020 3201.9090 42. Synthetic organic tanning substances, inorganic tanning 3202.1000 substances, tanning perpetrations, whether or not 3202.9010 containing natural tanning substances; enzymatic 3202.9090 preparations for pre- tanning 43. Disperse dyes and preparations based thereon. 3204.1100 44. Acid dyes & preparations based thereon 3204.1200 45. Basic dyes & preparations based thereon 3204.1300 46. Direct dyes & preparations based thereon 3204.1400 47. Indigo Blue 3204.1510 48. Vat dyes & preparations based thereon 3204.1590 49. Reactive dyes and preparations based thereon 3204.1600 50. Pigments and preparations based thereon 3204.1700 51. Dyes, sulphur 3204.1910 52. Dyes, synthetic 3204.1990 53. Synthetic organic products of a kind used as fluorescent 3204.2000 brightening agents. 54. Other synthetic organic colouring matter 3204.9000 55. Pigments and preparations based on titanium dioxide. 3206.1900 56. Other colouring matter and other preparations 3206.4900 57. Granules, flakes, powder of glass (others) 3207.4090 58. Prepared water pigments of a kind used for finishing 3210.0020 leather 59. Cationic surface active agents 3402.1210 3402.1220 3402.1290 60. Non-ionic surface active agents 3402.1300 61. Surface active preparations and cleaning preparations 3402.9000 excluding detergents 62. Preparations for the treatment of textile material, leather, 3403.1110 fur skins or other material 3403.1120 3403.1990 3403.9110 3403.9190 63. Spin finish oil 3403.9131 64. Artificial waxes and prepared waxes 3404.9010 65. Other artificial waxes 3404.9090

66. Electro polishing chemicals 3824.9060 67. Other glues (printing gum) 3505.2090 68. Shoe adhesives 3506.9110 69. Hot melt adhesive 3506.9110 and 3506.9190 70. Enzymes 3507.9000 71. Photographic film, with silver halide emulsion (for textile 3702.4300 and 3702.4400 use) 72. Sensitizing emulsions (for textile use) 3707.1000 73. Fungicides for leather industry 3808.9220 74. Preparation of a kind used in textile or like industry 3809.9110 and 3809.9190 75. Preparation of a kind used in leather or like industries 3809.9300 76. Compound plasticizers for rubber or plastics 3812.2000 77. Antimony triacetate 3815.1910 78. Palladium catalyst 3815.9000 79. Electrolyte salt 3824.9060 80. Polymers of vinyl acetate (in aqueous dispersion) 3905.1200 81. Vinyl acetate copolymers: in aqueous dispersion 3905.2100 82. Polymers of vinyl alcohol 3905.3000 83. Other vinyl polymers 3905.9990 84. Other acrylic polymers 3906.9030 85. Acrylic polymers in primary forms 3906.9090 86. Polyethylene terephthalate-Yarn grade, and its waste 3907.6010 87. Nylon Chips (PA6) 3908.1000 88. Polyurethanes 3909.5000 89. Silicones in primary form 3910.0000 90. Cellulose nitrates nonplsticised 3912.2010 91. Other cellulose nitrates 3912.2090 92. Carboxymethyl cellulose and its salts 3912.3100 93. Alginic acids, its salts and esters 3913.1000 94. Nylon tubes 3917.3910 95. Artificial leather 3921.1300 96. Synthetic leather grip 3926.9099 97. Natural rubber latex 4001.1000 98. Technical specialized natural rubber 4001.2200 99. Rubber latex 4002.1100 100. Synthetic rubber SBR 1502 latex 4002.1900 101. Butadiene rubber 4002.2000

102. Thermo-plastic rubber (T.P.R.) 4002.9900 103. Vulcanized rubber thread and cord 4007.0010 4007.0090 104. Leather shearing-finish leather with wool 4302.1910 105. Articles of apparel and clothing accessories of fur skin 4303.9000 106. Artificial fur and articles thereof 4304.0000 107. English willow cleft (wood) 4404.1000 108. Cork Granules 4501.9000 109. Cork sheet 4504.1010 110. Satin Finishing Wheels 6804.2100 111. Carbon Fiber 6815.1000 112. Glass fiber sleeves 7019.9010 113. Forging of surgical and dental instruments 7326.1920 114. Nickel rotary printing screens 7508.9010 115. Hooks for footwear 8308.1010 116. Eyes and eyelets for footwear 8308.1020 117. Tubular or bifurcated rivets 8308.2000 118. Strings 8308.9090 119. Bladders and covers of inflatable balls 9506.9919 120. Press-fasteners, snap fasteners and press studs 9606.1000 121. Buttons of plastics not covered with textile material 9606.2100 122. Buttons of base metal not covered with textile materials 9606.2200 123. Studs 9606.2910 124. Buttons 9606.2920 125. Slide fasteners 9607.1100 9607.1900 126. Wood-pulp (dissolving grade) 4702.0000 if imported by manufacturers of viscose staple fibre for use in the manufacturing of viscose staple fibre. 127. Cotton linter 1404.2000 128. Sequins 3926-9099 CONDITIONS (a) Textile Sector:- (i) The facility of zero-rating shall be available to every such person engaged in manufacturing or trading in textile sector (including carpets and jute) who is registered for the purpose of sales tax other than retailer. No tax shall be payable at any stage of the supply chain if goods are sold by a registered

person to a registered person till the stage of processing where sales tax shall be charged as specified hereunder; (ii) the benefit of this notification shall be available to registered importers, traders, manufactures and exporters. In case where a commercial importer sells any imported goods to unregistered person, he shall charge and pay sale tax @ 6% of value of supply, if the goods are usable in textile sector up to the stage of spinning including the product of spinning such as yarn and its by-products, whereafter such importer shall charge and pay sales tax @ 4% of value of supply; (iii) no sales tax shall be payable at ginning or man-made and synthetic fiber manufacturing stage; (iv) in case of registered manufacturers importing their inputs or acquiring their inputs from commercial importers or registered manufacturers, such manufacturers shall charge and pay sales tax @ 6% of value of supply only at the spinning stage, i.e. yarn and its by-products if these goods are supplied to any unregistered person provided that if such goods relate to the stages after spinning, sales tax shall be charged and paid @ 4% of the value of supply; (v) in case of yarn purchases on payment of sales tax @ 6% of value of supply from spinning mills by unregistered persons i.e. traders or persons engaged in activities like sizing, warping, weaving, intermediary and other ancillary processes etc. before processing of finished fabric, no further amount of sales tax shall be charged or demanded; (vi) in case of registered persons engaged in providing processing services of any kind in respect of textile goods, such person shall charge from the person who owns the goods but is not a registered person, sales tax @ 4% of service charges; (vii) in case of stages after weaving, if the fabric is sold by a registered manufacturer to an unregistered person, sales tax shall be charged @ 4% of value of supply, if such manufacturer has availed zero-rate facility at previous stages of the production chain; (viii) at the stage of processing or finishing of any kind of fabric or stitching of such fabric, if any registered person supplies the goods including finished products like finished, dyed/processed/printed fabric, textile apparel, home textile and

clothing including garments and all non-woven products etc. to an unregistered buyer, he shall charge and pay sales tax @ 4% of the value of supply; and (ix) the registered persons who have acquired goods at zero-rate under this notification shall pay sales tax @ 4% of value of supply on their supplies of all kinds of finished products to retailers, regardless of the registration of such retailers. (b) Leather, Sports & Surgical Goods Sectors:- (i) Zero-rating facility shall cover the whole registered supply chain covering both imports and local supplies except retail; (ii) registrations will start from tanneries and manufacturers of surgical and sports goods including the persons engaged in ancillary industrial activities; (iii) the jobbers working in informal or un-organized sector for individual and specified industrial or like processes prior to manufacturing of leather, surgical and sports goods in tanneries and other manufacturing units shall not be required to be registered provided their annual turnover from service charges does not exceed Rs. 5 million or their annual utility (electricity, gas and telephone) bills do not exceed seven hundred thousand rupees, and if so exceed, they will be required to be registered; and (iv) no sales tax shall be charged at any stage of supply for domestic consumption except that where a tannery supplies its product to any un- registered person other than retailer, it shall charge and pay sales tax @ 6% of the value of supply and where any finished product of leather, sports or surgical goods is supplied to any un-registered person by a manufacturer other than tannery, such manufacturer shall charge and pay sales tax @ 4% of the value of supply. All supplies of finished goods made to retailers shall, however, be charged to sales tax @ 4% regardless of their registration. (c) Miscellaneous:- (i) Benefit of zero-rating or reduced rate shall be admissible only if the goods covered in this notification are usable and are used in the aforesaid sectors for trading and manufacturing purposes. No other sector or industry shall be entitled to the benefit of this notification;

(ii) no input tax adjustment or refund shall be admissible to any registered person against his liability of sales tax @ 6% of the value of supply, or as the case may be, of @ 4% of value of supply. However, admissible refund in case of capital goods, maintenance parts, lubricants, packing materials or other sector-specific used inputs, not covered under this notification, whether imported or acquired locally, shall be paid to such person against zero-rated supplies in one week of filing of the complete claim; (iii) the registered persons of these sectors shall be entitled to acquire electricity and gas at zero-rate in the manner prescribed by Federal Board of Revenue; (iv) subject to miscellaneous condition (ii) above, where at any stage of registered supply chain, no liability to charge and pay sales tax accrues under this notification, the supply at such stage shall be deemed to be a supply chargeable to sales tax at the rate of zero percent and reflected on the tax invoice accordingly; (v) in case of persons already registered under the Sales Tax Act, 1990, benefit of this notification shall be available only if they are shown as active in active taxpayers list (ATL) on the website of Federal Board of Revenue and have done a declared business activity in any of the tax periods during the last twelve months; and (vi) the composite units including wholesalers covering supplies up to retail stage shall pay sales tax @ 4% of value of supply and shall not pay any other amount of upfront tax on their retail sales under any other scheme for retailers under the Sales Tax Act, 1990 or notifications issued or rules made thereunder. 2. This notification shall take effect on and from the 4th November, 2011. [C.No.1(140)C(RGST)/2011 (Pt-V)] (Shahid Hussain Asad) Additional Secretary