ISLAMABAD, Nov 29: The Central Board of Revenue (CBR) has notified new rules for the supply of hand-knotted carpets to foreign nationals at zero-rated sales tax.

A notification on “the zero-rating of hand-knotted carpets rules 2001” was issued here on Thursday.

Under the rules, carpets can be supplied to the foreigners by the registered persons against payment in foreign exchange through a foreign credit card for export as personal baggage.

However, the goods supplied under these rules are not exported or remittance is not made in the prescribed manner or within thirty days, sale tax involved on such goods would be recovered from the supplier, in addition to prescribed legal or penal action.

According to the new rules, the foreign national will be required to present his passport or valid identification to the supplier for noting the particulars in the zero-rated invoice.

The zero-rated tax invoice would record the name, address, passport number of the foreign buyer, price of each carpet in foreign currency, the number of the foreign credit card and name of its issuing authority besides the particulars required under section 23 of the act.

And the foreign national will be required to sign a receipts-cum-undertaking in the form to be provided to him/her by supplier.

The export of carpets as personal baggage by foreign nationals would be allowed by the customs authorities on production of a zero-rated invoice and subject to the conditions of the import and export procedure order.

If a foreign national is unable to produce a zero-rated invoice but fulfils the conditions of the import and export procedure order, export would be allowed by the customs authorities after obtaining the name and address of the suppliers, which would be communicated to the concerned sales tax authorities for appropriate action under the act.

The foreign currency will be surrendered to the State Bank, and the supplier will receive the payment in Pakistani rupees as per the prevailing SBP’s procedures and foreign exchange regulations.

The supplier will maintain separate records showing supply of zero-rated carpets and receipts and encashment of foreign currency received under these rules, besides the records prescribed under the act and rules made thereunder.

At the time of audit, the auditors shall also confirm that the records prescribed under these rules have been maintained and that foreign currency has been remitted in accordance with the prescribed procedure.