ISLAMABAD, Dec 12: The government on Wednesday announced repayment of 90 per cent customs duty and sales tax on export of ghee and cooking oil to penetrate the growing market of Afghanistan and Central Asian States (CAS).

The new rates are expected to boost export of ghee and cooking oil to these markets which are flooded with Dubai- based manufactured ghee in the wake of inconsistent policies of the government.

A notification (SRO 1201 of 2007) was released here by amending SRO 993 of 2006 for implementation of the decision. Currently, only 80 per cent duty and sales tax repayment was permissible on export of ghee to Afghanistan.

Chairman, Pakistan Vanaspati Manufacturers Association (PVMA), Sh. Amjad Rashid, told Dawn that the new rates will be effective retrospectively from Sept 15. However, he said that government continues to deny 12 per cent (10 pc custom and sale tax, two per cent income tax) duty repayment to ghee exporters.

He said a decision had already been taken but it was notified after a gap of around two months due to Federal Board of Revenue’s procedural requirement.

He said export of ghee to Afghanistan has already recorded a 50 per cent growth in export during the last two months.

Mr Sheikh was of the opinion that the association was working on a proposal to convince the government to increase the repayment to 95 per cent, which would further make Pakistani ghee more competitive in these markets.

Answering a question, he replied that export of ghee to Afghanistan can be enhanced to 300,000 tons annually in case the government revised upward the repayment ratio further.

He added that export of ghee has also started to the CAS.

He was of the opinion despite the low return, the ghee exporters will have to wait for at least three months in getting their refunds.

An official announcement of the FBR said the rates of repayment were originally revised after every six months to accommodate changes in import prices of edible oil. This required involvement of IOCO (Input Output Coefficient Organisation).

This procedure entailed delays and on the other hand prices of edible oil were rising steeply. This created concerns and problems for exporters. Therefore, SRO has been amended to provide for automatic adjustment in rates based on import prices during the preceding moth.

Moreover, the rates of refund on export of margarine have also been included which were not previously notified.

Through another notification (SRO 1203), the FBR issued procedure for payment of refund to OEMs of vehicles for months July 2007 to December 2007.

With effect from July 1, sales tax is not payable at the time of receipt of advances but at the time of actual delivery of goods.

Since, OEMs of vehicles have already discharged their liability in respect of advances received during the previous years and now they do not have to pay sales tax on the sale of vehicles for which tax was paid at the time of receipt of advance, therefore, their output tax has temporarily gone down till the previous advances are cleared.

To provide relief during this interim period, the procedure for refund of excess input tax has been notified.

Through SRO 1204 of 2007, the FBR delegated powers to collectors for extension of time limit for submission of refund documents -- parameters specified.

Refund rules require submission of documents for refund claims in 60 days.

Several representations were being received in the FBR to condone delay in this respect. To provide relief to export- oriented sector, the powers of extension have been delegated to collectors and certain parameters have been laid down for granting such extension.