Zero Rating of Hand-Knotted Carpets Rules, 2001
28th November, 2001
In exercise of the powers conferred by section 71 of the Sales Tax Act, 1990, the Federal Government is pleased to make the following rules, namely :-
1. Short title, application and commencement.-
(1) These rules may be called the Zero-rating of Hand-Knotted Carpets Rules, 2001.
(2) They shall apply to supplies of hand-knotted carpets by registered persons to foreign nationals against payment in foreign exchange through a foreign credit card for subsequent export as personal baggage of the foreign nationals.
(3) They shall come into force at once.
(1) In these rules, unless there is anything repugnant in the subject or context,-
(a) “Act” means the Sales Tax Act, 1990;
(b) “Carpet” means a hand-knotted carpet of Pakistan origin;
(c) “foreign currency” means foreign currency as defined in clause (c) of section 2 of the Foreign Exchange Regulation Act, 1947 (VII of 1947);
(d) “foreign credit card” means a credit card issued outside Pakistan by a foreign bank or foreign credit card company, payment of which is made in foreign exchange;
(e) “foreign national” means a person who has nationality other than of Pakistan, and holds a valid foreign passport at the time of visit to pakistan;
(f) “foreign passport” means a valid passport of a country other than Pakistan;
(g) “Import and Export Procedure Order” means the Import and Export Procedure Order for the time being in force, issued by the Ministry of Commerce, Government of Pakistan;
(h) “registered supplier” means a person registered under the Act, making supplies of hand-knotted carpets of Pakistan origin;
(i) “valid identification” means an officially issued document or card such as an identity, a driving license or service card, bearing a paragraph by which the holder thereof can be positively identified;
(j) “zero-rated invoice” means a zero-rated invoice issued under sub-rule (20) of rule 4.
3. Supply deemed to be export.-
A supply of carpet under these rules shall be deemed to be an export for the purposes of section 4 of the Act, provided the procedure prescribed in these rules is observed and foreign currency against the supply is received in terms of rule 6.
4. Issuance of zero-rated tax invoice.-
(1) Any foreign national desirous of taking a zero-rated supply of carpets from a registered supplier shall make payment in foreign currency through a foreign credit card and present his foreign passport or valid identification to the supplier for noting the particulars in the invoice.
(2) The supplier shall issue a zero-rated tax invoice, mentioning therein the name, address and passport number of the foreign buyer, price of each carpet in foreign currency, the number of the foreign credit card and the name of its issuing authority besides the particulars required under section 23 of the Act.
(3) The foreign national shall sign a receipt-cum-undertaking in the form as set out in the Annexure to these rules.
5. Export of carpets as personal baggage.-
(1) The export of carpets as personal baggage by foreign nationals shall 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.
(2) If a foreign national is unable to produce a zero-rated invoice but fulfils the conditions of the Import and Export Procedure Order, export shall be allowed by the customs authorities after obtaining the name and address of the supplier which shall be communicated to the concerned sales tax authorities for appropriate action under the Act.
6. Remittance of payment.-
(1) The export of carpets shall not be deemed to have been completed unless payment therefore is received in foreign currency and goods are actually taken out of Pakistan.
(2) The foreign currency shall be surrendered to the State Bank of Pakistan and the supplier shall receive the payment in Pak rupees as per the prevailing State Bank of Pakistan’s procedures and foreign exchange regulations.
(3) In case goods supplied under these rules are not exported or remittance is not made in the prescribed manner or within thirty days, sales tax involved on such goods shall be recoverable from the supplier, besides legal or penal action under the relevant provisions of the Act.
7. Maintenance of records and audit.-
(1) The supplier shall maintain separate records showing supply of zero-rated carpets and receipt and encashment of foreign currency received under these rules, beside the record prescribed under the Act and rules made thereunder.
(2) 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.
[See rule 4(3)]
RECEIPT-CUM-UNDERTAKING FOR ZERO RATED SUPPLY OF HAND- KNOTTED CARPETS TO FOREIGN NATIONALS
1. NAME : ________________________________________________
2. ADDRESS : _____________________________________________
3. TELEPHONE No. : ________________________________________
4. NATIONALITY : __________________________________________
5. PASSPORT No. OR OTHER IDENTIFICATION No. : ________________
6. CREDIT CARD No. : _______________________________________
7. APPROX. DEPARTURE FROM PAKISTAN : _______________________
I hereby confirm receipt ____________________________ hand-knotted carpet(s) from M/s._______________ against zero-rated invoice No._______ dated _______, against payment in foreign currency through my credit card and undertake to take it/them out of Pakistan on my departure.