| Islamabad: The Federal Board of Revenue (FBR) has shared the updated versions of the Sales Tax Act, 1990, and the Federal Excise Act, incorporating amendments introduced through the Finance Act 2023, according to news published in the leading newspaper on July 5. These amendments bring significant changes to the taxation system in Pakistan.
Read: FBR shares Income Tax Return forms for SMEs
The following are the details on the updated Sales Tax Act and Federal Excise Act:
If taxable supplies are made to individuals without a registration number or who are not active taxpayers, a 4% further tax will be levied on the value of the supply.
Individuals involved in the manufacturing, possession, transportation, distribution, storage, or sale of specified goods with counterfeit tax stamps, banderoles, stickers, labels, or barcodes will face outright confiscation of such goods.
Sales tax zero-rating will be applicable to imports or supplies made by, for, or to qualified investments specified in the First Schedule to the Foreign Investment (Promotion and Protection) Act, 2022, within the duration mentioned in the Second Schedule of the Act.
Blood transfusion sets not packed in aluminium foil but imported alongside blood bags CPDA-1, in the same consignment and corresponding quantity, are exempt from sales tax.
Read: FBR to set up International Centre of Tax Excellence
Sales tax exemption is granted on supplies and imports of plant machinery and equipment for installation in tribal areas. Industrial inputs used by industries located in tribal areas are also exempted. These exemptions are applicable until June 30, 2024.
Sales tax exemption is provided for electricity supplies made to residential and commercial consumers in tribal areas, as well as industries in tribal areas that were established and began production before May 31, 2018, excluding specific sectors. This exemption is valid until June 30, 2024.
A 1% sales tax is applicable to substances registered as drugs under the Drugs Act, 1976, and medicaments classified under Chapter 30 of the First Schedule to the Customs Act, 1969. However, certain items such as filled infusion solution bags, scrubs, detergents, surgical tapes, disinfectants, and cosmetics are exempt from this tax.
Raw materials used for the basic manufacture of pharmaceutical active ingredients and products are subject to a 1% sales tax. Reduced tax rates apply to imported raw materials subject to specific conditions.
Read: BoR Sindh, Balochistan to share property ownership data with FBR
These amendments introduce significant changes to the taxation system in Pakistan, aiming to streamline processes, address counterfeiting issues, and provide exemptions for specific goods and areas. |
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