FBR to Impose Additional Tax on Certain Items

The Federal Board of Revenue (FBR) may generate additional revenue of Rs. 200 billion by imposing a standard rate of 17% GST on particular items subjected to lower rates of sales tax i.e. 5%, 7.5%, and 10%.

Although the government is not ready to charge additional taxes yet, the FBR is revising the exemption schedule and conditional exemption schedule of the sale tax act 1990.

The FBR is also analyzing the exemption schedule for possible removal of sales tax on various items at the import stage. Furthermore, the FBR sources informed that such measures can generate a revenue of Rs. 200 billion in the remaining period of 2019-2020.

Lower rates of sales tax are presently applicable to:

  • Oil, cake and other solid residues (5%);
  • Oilseeds meant for sowing (5%);
  • Incinerators for disposal of waste management, motorized sweepers and snow plows (5%);
  • Re-importation of foreign origin goods, which were temporarily exported out of Pakistan (5%);
  • Waste paper (5%);
  • Plant, machinery, and equipment used in the production of biodiesel (5%);
  • Secondhand and worn clothing or footwear (5%);
  • Agricultural tractors (5%);
  • Tillage and seedbed preparation equipment (5%);
  • Irrigation, drainage, and agrochemical application equipment (5%);
  • Seeding or planting equipment (5%);
  • Harvesting, threshing and storage equipment (5%);
  • Post-harvest handling and processing and miscellaneous machinery (5%);
  • Set-top boxes for gaining access to the internet (5%);
  • Satellite dish receivers (5%);
  • Plant, machinery, equipment, and apparatus, including capital goods (5%)
  • Raw cotton and ginned cotton (10% at import stage);
  • Plant and machinery not manufactured locally and having no compatible local substitutes (10% at import stage);
  • Dairy products sold in retail packing under a brand name (10% sales tax);
  • Ingredients of poultry feed, cattle feed, except soybean meal and oilcake of cotton-seed (10%);
  • LNG imported for servicing CNG sector and local suppliers thereof (5%);
  • Frozen prepared or preserved sausages and similar products of poultry meat (8%);
  • Meat and similar products of prepared frozen or preserved meat (8%);
  • Prepared food, foodstuff, and sweetmeats supplied by restaurants, bakeries, caterers and sweetmeat shops (7.5%).
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