KARACHI, Jan 17: The Sindh government has revised upward rate of infrastructure cess, adding a slab of weight and distance covered by an import consignment to reach its destination in the province. The consignees will now have to pay one paisa per km for the distance to their destination.
According to the new schedule of tax announced through an ordinance issued by the governor of Sindh for consignments up to 1,250 kg, infrastructure cess will be 0.5 per cent of C&F value, plus one paisa per km.
The rates of a consignment of 2,030 kg and above will be 0.505 per cent plus one paisa per km; for 4,060 kg and above the rate will be 0.510 per cent plus one paisa per km; for 8,120 kg and above 0.515 per cent; for 16,000 kg 0.520 per cent and for consignments exceeding 16,000 kg the rate will be 0.525 per cent plus one paisa per km.
Earlier, the infrastructure cess was charged at a flat rate of 0.5 per cent of the C&F value of a consignment. However, a number of importers challenged the rate in the Sindh High Court arguing that some importers were using less amount of infrastructure than others hence the tax should not be charged at a flat rate. The case is pending in the SHC for the last one-and-a-half years.
To satisfy the complainants, the Sindh governor issued the Sindh Finance (Amendment) Ordinance, 2006, which has come into effect with immediate effect.The ordinance said in the Sindh Finance Act, 1994, hereinafter referred as the said Act, in section 9, for sub-section (1), the following shall be substituted:-“(1) There shall be levied and collected a cess for maintenance and development of infrastructure on goods at the rate determined on the basis of their value, net weight, and distance in accordance with the schedule appended to this Act, for carriage by road and smooth and safer movement in the province upon entering or before leaving the province from or for outside the province or country, through air or sea.
The infrastructure cess is a major revenue earner for the Sindh government, which collected Rs4,602.761 million during 2005-06. The six months (July-Dec 07) collections from the cess is Rs2275.987 million.
Secretary Excise and Taxation Iqbal Ahmed Bablani told Dawn on Wednesday that the step taken by the Sindh government would end long litigation between the government and the importers and it would lead to increase in revenue. The concerned parties were hitherto depositing cess in the court.
He said that the cess rates had been rationalised to give benefit to the importers using fewer infrastructure compared to those importing huge consignments and carrying them to a long distance.
Chairman, KCCI sub-committee on Taxation, was unable to give his comment on the development, saying that he needs some time to give his reaction.
He, however, said that levy of one paisa per km on the distance covered by an import consignment will increase the cost of imports, which would be definitely passed onto consumers.