ISLAMABAD, July 13: The Central Board of Revenue has agreed to a proposal of the Pakistan Cotton Ginners Association (PCGA) to allow zero rating on supply and import of cottonseeds.

A CBR official told Dawn on Tuesday that the levy of GST on cottonseed oil would, however, remain the same.

The proposal was under consideration following the PCGA observation that importers and suppliers of cottonseed could not get input adjustment of the sales tax paid on cottonseeds. They says that cottonseed constitute in terms of weight at around 85 per cent oil cake and 10 per cent oil extracted from it.

The government has levied a 15 per cent general sales tax (GST) on cottonseed and its oil. However, oil cake remained exempted from the levy of GST. This has created problems for oil industries to claim input adjustment against duty paid on cottonseed, which they believed would result in a refund issue.

They want the government to charge sales tax on oil extracted from cottonseed so that they could not face any refund issue. According to the official, the CBR would issue a notification in this regard following an approval by the cabinet.

Meanwhile, in a meeting of PCGA delegation with member sales tax Shahid Ahmed in Karachi on Tuesday, it was decided to withdraw GST on cottonseed on the condition that zero rate invoice would be issued on the sale of cottonseed for maintaining the record.