ISLAMABAD, June 21: The government has rationalized the SRO 507 allowing manufacturers to claim input tax on supply of locally manufactured non-taxable goods to un-registered persons.

The CBR, in this regard, issued an SRO592 here on Saturday by amending the SRO 507 to do away with the budgetary anomaly.

Officials in the Central Board of Revenue (CBR) told Dawn that the decision was taken after listening to the points of view of the relevant stakeholders seeking amendments in the SRO507, “which has affected the industrial activities.”

The government in the budget 2003-04 announced that manufacturers could not get input tax on local supply of goods manufactured by consuming raw materials, parts, sub-components and components imported under various concessionary notifications to persons not registered or enrolled under the sales tax act.

Elaborating the decision, the officials said the manufacturers could now claim input tax on supply of goods manufactured from imported raw materials, parts, sub-components and components to un-registered person provided the end products were duty free.

The provisions of SRO507 would, however, be applicable for the taxable goods who made supply to registered persons, added the officials.

Similarly, the direct supply of such goods to end-consumers in retail and government departments, autonomous and semi- autonomous organization, banks and local government, who were not liable to registration would also be exempted from the provision of SRO507.

Moreover, the SRO 507 would be applicable only on goods, which were manufactured from raw materials, parts, sub-components and components, whose bills of entry filed on or after July 1, 2003, added the officials. This means that the restriction of SRO 507 would come on supply of goods from August.

The officials said SRO507 would also not be applicable on supply to those persons, who were paying withholding tax under income tax, but they were not registered under sales tax act.

The SRO592 reads as: “in the aforesaid notification, for clause (b), the following shall be substituted namely-taxable goods, excluding those sold in retail to ultimate consumers or persons whose income is not liable to income tax under the income tax ordinance 2001 (XLIX of 2001) but deduct income tax at source under the said ordinance or government organization not liable to registration or enrolment under the sales tax act, 1990, manufactured or produced by consuming raw materials, parts, sub-components and components imported and cleared against bill of entry or goods declaration filed on the 1st July, 2003 or thereafter, under various concessionary notifications issued under section 19 of the customs act, 1969 (IV of 1969) or under section 13 of the sales tax act,1990.”