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  • BR 3-10-13 - Input Tax Adjustment Facility Restored

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    The Federal Board of Revenue has restored a tax adjustment facility for the ghee and cooking oil industry. Manufacturers in this industry can now adjust up to 5% of input tax paid on palm fatty acid distillate (PFAD), a byproduct of refining crude palm oil. Previously, no input tax adjustment was allowed for the 1 rupee/kg federal excise duty paid under SRO 24(I)/2006. However, the 16% federal excise duty paid on imported crude palm oil can now be adjusted against supplies of PFAD, with a maximum adjustment of 5% since PFAD constitutes 5% of crude palm oil. This aims to prevent excessive tax adjustment claims.

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    BR 3-10-13- Input Tax Adjustment Facility Restored

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    The Federal Board of Revenue has restored a tax adjustment facility for the ghee and cooking oil industry. Manufacturers in this industry can now adjust up to 5% of input tax paid on palm fatty acid distillate (PFAD), a byproduct of refining crude palm oil. Previously, no input tax adjustment was allowed for the 1 rupee/kg federal excise duty paid under SRO 24(I)/2006. However, the 16% federal excise duty paid on imported crude palm oil can now be adjusted against supplies of PFAD, with a maximum adjustment of 5% since PFAD constitutes 5% of crude palm oil. This aims to prevent excessive tax adjustment claims.

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    © All Rights Reserved
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    5 views1 page

    BR 3-10-13 - Input Tax Adjustment Facility Restored

    Uploaded by

    msadhanani3922
    The Federal Board of Revenue has restored a tax adjustment facility for the ghee and cooking oil industry. Manufacturers in this industry can now adjust up to 5% of input tax paid on palm fatty acid distillate (PFAD), a byproduct of refining crude palm oil. Previously, no input tax adjustment was allowed for the 1 rupee/kg federal excise duty paid under SRO 24(I)/2006. However, the 16% federal excise duty paid on imported crude palm oil can now be adjusted against supplies of PFAD, with a maximum adjustment of 5% since PFAD constitutes 5% of crude palm oil. This aims to prevent excessive tax adjustment claims.

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    © All Rights Reserved
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    Palm fatty acid distillate: input tax adjustment facility restored

    October03,2013 RECORDERREPORT

    The Federal Board of Revenue has restored facility of input tax adjustment upto maximum of 5 percent on palm fatty acid distillate (PFAD) for the ghee and cooking oil industry. The FBR has issued instructions on 'Input tax adjustment on by-product PFAD' to all Chief Commissioners of the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) here on Wednesday. Through these directives to the Chief Commissioners Inland Revenue, the Board has allowed input tax adjustment to the said sector. Sources said that the manufacturers of PFAD import crude palm oil (CPO) as their raw material to refine palm oil and PFAD is produced as by-product. At the import stage, the CPO importer pays 16 percent Federal Excise Duty (CED) as per Second Schedule of the Federal Excise Act, 2005 and in addition they pay Re 1/kg Federal Excise Duty in lieu of output tax under SRO 24(I)/2006. According to the FBR's instructions issued to the field formations, the issue regarding adjustment of input tax on Palm Fatty Acid Distillate (PFAD) has been considered in the Board. It is clarified that the Federal Excise Duty (FED) paid @ Rs 1 per kg under SRO 24(I)/2006 dated 7th January, 2006 is attributable only to the value addition occurring during the manufacture of vegetable ghee/ cooking oil. Therefore, no input tax adjustment can be allowed against FED @ Rs 1 per kg. However, as sales tax is payable on supplies of palm fatty acid distillate (PFAD), adjustment of FED paid @ 16 percent in sales tax mode on import of crude palm oil is allowed against supplies of PFAD, subject to apportionment in terms of Chapter IV of the Sales Tax Rules, 2006 (Apportionment of Input Tax). As concerned associations have confirmed that from imported crude palm oil, the palm fatty acid produced constitutes 5 percent, therefore, in order to prevent excessive claims of input tax, maximum adjustment permissible is also 5 percent of the FED paid @ 16 percent, the FBR added.

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