Sales Tax Instructions

(iii)
(iv)
(v)
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Sales Tax Instructions, 2009
exemption notifications have been withdrawn and the Finance Bill and
Schedules to the Act will be effective from 1.7.1996, fresh notifications
for grant of exemption on foodstuff, fertilizers & insecticides etc. have
been issued which will be valid upto 30.6.1996. After that date the
exemption regime will be governed by the Schedules to the Act.
Goods chargeable to tax at the higher rate.—Last year sales tax on
certain selected raw materials was imposed @ 20%. The list is being
expanded to include more items and the rate has been raised to 23% w.e.f
13.6.1996. Major items added are plastic raw materials, iron & steel
scrap, galvanized & stainless steel sheets/plates and HR/CR
sheets/plates. This list is given in the Fist Schedule to the Act. Since
Schedules will be effective from 1.7.1996, a notification for the interim
period has been issued to make the change effective from 13.6.1996.
Tax @ 5% on sensitive items.—Some sensitive items like medicines &
their raw materials, machinery for fertilizers and pesticides are being
taxed at the concessional rate of 5%. Items liable to tax @ 5% have been
included in the 2 nd Schedule to the Act. To give the measure immediate
effect necessary notification has been issued which will be operative till
30.6.1996 only.
Sales tax on newsprint.—Rate of sales tax on newsprint has been
enhanced from 12% to the standard rate. Relevant notification granting
concessional rate has been withdrawn.
2% tax in lieu of retail stage tax.—At present 2% tax is leviable on the
landed cost of 28 categories of imported goods under SRO 692(I)/92,
dated 22.7.1992. This tax is being withdrawn and these goods will now
be chargeable to standard rate of sales tax only.
Increase in the standard rate.—Standard rate of sales tax has been
increased to 18% with immediate effect. Similarly, higher rate of 20%
has been increased to 23%.
PART – B
LEGAL AND PROCEDURAL CHANGES
1. Important and far-reaching changes are being made in the Sales Tax Act, 1990 to
bring it in line with standard VAT mode as practiced all over the world. Some salient
changes are given below. The text of the amendments should, however, be studied
carefully to get acquainted with all the changes.
(i)
(ii)
Payment of tax in banks.—Section 6 is being amended to provide for
payment of tax in designated banks and to omit the provisions relating to
payment of tax through the account current. Thus accounting and
reconciliation problems on this count will be eliminated.
Purchases from non tax-payers.—Section 7 is being amended to provide
that a registered person buying goods from the intermediaries shall not
claim input tax credit unless he holds a ―replacement invoice‖ issued by
the intermediaries. As a result importers, distributors and wholesalers
would be able to register voluntarily for issue of such invoices.