Major duty cuts in the offing: Engineering, construction
By Khaleeq Kiani
ISLAMABAD, May 25: The government plans to reduce duties on plastic, steel, power sector, ship breaking, aluminium, medical equipment and a number of other engineering industries
in the forthcoming budget as part of tariff rationalization programme to give major boost to investment in construction and engineering industry.
Sources at the Engineering Development Board (EDB) told Dawn the duty reduction had been discussed with the Central Board of Revenue on the basis of their revenue impact and would be the part of the 2004-05 finance bill.
However, the duties on bus and truck tyres and some pesticides, which are manufactured locally in abundance, would be increased significantly, the sources said.
PLASTIC ITEMS: The sources said the duty on engineering plastics not manufactured locally under chapter 39 would be reduced from 10 per cent to five per cent while the duty on all other plastics not manufactured locally including PP and PE would be cut from 20-25 per cent to 10 per cent.
RUBBER: Duty on raw rubber (PCT heading 40.01 & 40.02) would be reduced from five per cent to zero under SRO358, while duty on rubber items, not manufactured locally (Chapter 40), would be reduced from 20-25 to 10 per cent. The duty on bus and truck tyres (4011.2090) would be increased from existing 10 per cent to 25 per cent.
PAKISTAN STEEL: The five per cent duty on iron ore (26.01), magnese ore (26.02) and coal (27.01) would be zero rated through SRO 358 while five per cent duty on coke (27.04) and pig iron (72.01) would remain unchanged.
STEEL PRODUCTS: The 25 per cent duty on flat products i.e HRC, CRC coils and steel bars (in the series of 72.08 and up to 72.15) except tin plates would be brought down to 10 per cent.
Likewise, alloy steel products (from PCT 72.24 to 72.28) other than made by Pakistan Steel (like 7227.2000, 7227.9000, 7228.2010 and 7228.3010) would be reduced from 10-25 per cent to five per cent. The duty on secondary steel products will remain unchanged at 25 per cent and articles for iron or steel (chapter 73) will be reduced from 25 per cent to 20 per cent.
SHIPBREAKING: The 10 per cent duty on ship breaking (8908.0000) would be reduced to five per cent through SRO 358.
RAW MATERIAL: Duty on major raw materials used in manufacturing aluminium goods like foil (sheet exceeding 0.2mm re-rolled up to seven micron would be reduced from 10 to five per cent while duty on paper (poster) and lacquered blue, golden and silver would be brought down from 20-25pc to five per cent through SRO 358.
MACHINERY & EQUIPMENT AND INPUTS THEREOF: Twenty percent duty on all components and sub-components not manufactured locally would be reduced from 20pc to 10 per cent while 25 per cent duty on intermediary products manufactured locally (e.g pipes, motors etc) would be reduced to 20 per cent.
The duty on all finished products (chapter 84 and 85) presently at 20-25 per cent would remain unchanged while all the machinery and equipment presently at 10 per cent not manufactured locally in chapter 84 and 85 would be reduced to five per cent.
MEDICAL EQUIPMENT: The 25pc duty on raw material and components for local manufacture of medical equipment like dialysers, blood tubing lines for dialysis comprising arterial, venous lines and arterial and venous fistula needle sets comprising arterial and venous lines would be zero rated because the finished product is currently at zero.
UMBRELLA SRO: To provide level-playing field to the local manufacturers an umbrella SRO would be issued providing all such benefits of exemption in customs duty, sales tax, withholding tax, etc., to the local manufacturers that are available to the concessionary importers.
The dual charging of duties by customs authorities on the re-import of material when exported back for repair or replacement, whereas the duty has already been paid on their initial import.
POWER SECTOR: In SRO 435 (1)/2001 would be amended to add the wording of "including captive power projects for the use of industry itself" to allow all those tax and duty exemptions which are currently available to hydel or thermal power projects.
SCHEDULE FIFTH: An amendment to schedule fifth of the sale tax would be made to provide for zero rated sales tax on the supplies of locally manufactured plant, machinery and equipment to the companies or sectors those are entitled for exemption on the import stage. Likewise, the existing four slab of sales tax are proposed to be reduced to a single slab.
CENTRAL EXCISE: The CED would be removed from paints, varnish, transformer oil and base lube oil.
PESTICIDES: Duty on pesticides under PCT heading 3808.1060 would be increased to 10 per cent from existing five per cent as sufficient local manufacturing facilities are available. However, five per cent duty on herbicides and fungicides would remain intact.
MISCELLANEOUS: Duty on new plant and machinery (not manufactured locally) for industries like petroleum, petrochemicals, petroleum exploration, fertiliser, chemical, pharma, leather, textile, rice, food processing, marble, mining, construction and soda ash would be reduced to 0-5pc. However, 10 per cent duty on cement and sugar plans would be retained because investment is not priority in these two sectors.
