FED Flashcards
FED on
Goods
Rate?
Goods in VAT mode
What is non-VAT mode
Who ‘ll charges?
Are any goods (mentioned in Sch 1) exempt?
Variable as per 1st schedule P1
3 types of goods in VAT mode
Non VAT mode - Not adjustbale as input against Sales tax output
Charged by Manuf. or Comm Importer; for others part of supply chain (e.g wholesaler, etc) part of cost.
Exemption - Conditionally exempt Schedule III
FED on
Services
Rate?
Services in VAT mode
Any services exempt
Variable as per 1st schedule P2
Most of the services in VAT mode - SRO 550 of 2006
Exemption - Subject to provincial Sales Tax or conditionally exempt in Schedule III of FED law
Value for Charge
Normal - Imported and Local
free of charge or concessional basis
What is reatil Price—ST retail price vs FED retail price -Wts difference? e.g RP=200 FED%65………….FED? & value including FED?
What if more than two values of a product (like different in different cities) or value fixed by FBR lower than sales value, which value to be considered?
Normal
FED added to value for ST charge
FED excluded for FED charge
For ST=Value+custom+FED
For Income Tax=Value+custom+FED+ST
Free of cost/charge or on concessional basis - Open market basis price (e.g vredit cards fee waiver)
Retail price for FED=Retail price+FED (i.e. FED ‘ll be charged on retail price including EFD) - Tax on tax
Example Suppose RP=200 FED%65………….FED371…total=571
- Always Higher value
Retail Price Charge example (value) including FED
If retail price including FED and ST is 25,000, rate of FED 10%; ST 17%; What are values of FED & ST
Value exl ST & FED……………90/19231
Add: FED @ 10%……..10/2,137 (since for RP value incl of FED)
Value incl of FED………………………100 (Step_1)/21367
Add: ST@17%…..17/3632
Value incl. of ST & FED………………117/ 25,000
Applicability of FED on Service -Origin/Rendering
Charging Responsibility? Service Provider / Recepient
Services
- Originated in Pakistan rendered in Pakistan - Subject to Fed_Service Provider’s responsibility
- Originated in Pakistan rendered outside Pakistan - Subject to Fed_Service Recepient’s responsibility
- Originated outside Pakistan rendered in Pakistan - Subject to Fed_Service Provider’s responsibility
- Originated outside Pakistan rendered outside Pakistan - Out of scope
Retail Price Mechanism
(manufactured & imported)
Sales Tax vs FED
ST-applied to RP whether manufactured or imported (both RP mechanism)
FED-applied to RP in case of manufactured (local) goods; imported goods on import value/normal/customs except cigarettes
- FED (input) adjustment (output FED-input FED)? How to claim for for goods and how to claim for services?
- Important Conditions for input adjustment
- Is input adjustment allowed on services
-FED input adjustment against FED output is allowed only for goods; service FED input can not be adjusted against services output FED (services input can be against sales tax output where services in VAT mode)
(Only example available is cigerette)
-Conditions
To manufacturer only (not importer)
Direct input excisable only i.e raw material (not FED input related to indirect consumption)
Payment from customer received and payment to supplier made
Supplier declared in his return
Produce also excisable
Payment made for purchases through bank (including credit card)
Payment received for manufacture through bank (including credit card)
Purchase Invoice as proof
-No, only on goods not services
Excisable Goods
- Goods exempt from ST but subject to FED?
- Goods subject to both ST+FED?
- Goods in VAT mode FED?
-ST Exempt but FED -
White Cryst. Sugar,
Edible oil, vegetable ghee, cooking il
-ST+FED -
Cigerettes, tobaco, cigars, filter rod
cement excl white cement
NG, LNG
Cars
Arearated beverages concentrates,aerated water
-3 entries (Goods, esdible oil/ghee/sugar) described in 2nd schedule as in VAT mode
Exciseable Services
- Which services (practically) are subject to FED
- List of services subject to FED
Those services subject to Prov. ST shall not be subject to FED - Practically very few services left in respect of which FED is chargeable. All provinces except Balochistan have levied Prov. ST on services
Services
Ads (except newspaper/periodicals)
Air travel (both domestic & foreign)+Charter
domestic Airfreight on goods carriage
Shipping Agent services
Telecom ,except internet
Insurance, except marine+health+life+live stock
Banking+NBFI services on gross charges (except interest+mark up)
Finance Companies services - Modaraba/Musharika/Lease/Co-op societies/exchange dealers/Asset management
Franchise
Stock broker
Port handling/terminal serv.
VAT/Non-VAT Mode Difference
Difference b/w both categories
- VAT Mode - input can be claimed against ST output
- Non-VAT mode - input can not be claimed against ST output
Services in VAT mode (SRO 550 dtd 5-6-2006)
1@18.5% ——2—@16%
Telecom 18.5%
Advertisement
Shipping Agents
Banking & NBFI
Insurance
Stock brokers
Port & Terminal operaters (in relation to imports)
Eaxmple of services not in VAT mode
Franchise @10%
Passenger Air Travel (domestic-Int. both) @fixed rate
FED Exempt Goods (conditional)
Cigerettes to Navy, President, ect
Goods supplied to EPZ for further maunf.
In-house consump of goods for maunf. goods that are subject to FED e.g tobacco (itself subject to FED) used for maunf. of cigarettes
FED Exempt Services (conditional)
Insurance - marine for export, life, health, corp, livestock
Air ravel - Haj passengers
Advertisement - Newspapers/periodicals
Banking services
Haj/Umra
chequebook
insurance
Musharika/Mudaraba financing
Utility bills collection
CHARGE of FED
Which persons are subject to FED? retailers/wholesalers
Goods
Manuf. in Pakista
Imp. in Pakistan
Service in Pak
Specified goods ghee/oil, cigerettes) manuf. in non-triff area (FATA/PATA) and broght to tarif areas.
Hence cement from FATA/PATA to other is not FED leviable (but ST to be charged)
Persons subject to FED:
Manufacturers or Importers of goods
Service providers of FED services
BASIS of CHARGE
Ad Vaolrem - beverages & white sugar
Retail price - cigarettes
Weight/Qt - Ton/Kg/Ltr
Mesurement - CM
Units (BTU)
Prod. Capacity
Fixed basis - air tickets
When to Pay
Are Registrations of ST & FED separate?
Separate return
Return provisions
Import @ timeof import—–Local withh ST return-next month 15
Registrations of ST & FED are NOT separate
No separate same return for adjustment/payment
Return provision -same as ST
LIABILITY TO PAY
Buyer
or
Seller
BOTH IN CASE OF GOODS & SERVICES
MANUFACTURERE - in case of manuf. goods (i.e. seller Buyer pays to supplier manuf. not to FBR)
IMPORT - By Importer (Buyer)
SERVICES - LOCAL –By service provider
SERVICES - IMPORTED - Franchise services (royalty, etc) to Non resident —By receiver (i.e. buyer of services) -payment to FBR w/ST return [Franchise services -Not in VAT mode, input can not be claimed,however payment w/ST return to FBR]
Non-tarif to tarif areas - Prson bringing goods
ZERO RATE
When?
Drawback?
Apportionment?
Export (& Any other by FBR)
Input claim
If supply includes exempt,local&zero rate……Apportion input for refund e.g cigerette supplied Local, Exempt (e.g Pakistan Navy) & Export.
FED Law Schedules
- Schedule 1 - Dutiable goods (table1) & dutiable services (table 2)
- Schedule 2 - VAT mode FED goods
- Exemptions (to schedule 1 items) with conditions
- SRO 550 Services in VAT mode
FED Exempt goods & services
All Goods & Services except in Schedule 1
Further exemption to schedule 1 (dutiable goods/services) in schedule 3
Input Adjustment & Registration under ST Act or FED Law?
- Sales/Output subject to ST only
- Sales/Output subject to FED law only
- Sales/output subject to FED under VAT mode
- Sales Tax & FED under VAT mode - allowed; Normal FED not allowed (Reg u/ST)
- FED under VAT mode and Normal FED (both)- allowed; Sales Tax - not allowed (Sec 6). (Reg u/FED)
- All three (ST/FED VAT mode/FED normal) (Sec 7) allowed (Reg u/ST)
Under VAT mode
ST input can be addjusted against FED output?
If FED output under VAT mode ST input can be adjusted
