Under section 13 of The Sales Tax Act 1990, the Sixth Schedule of the Sales Tax Act, 1990 specifically and explicitly mentions those goods on which exemption of sales tax is available. Other exemptions are available in various notifications (SROs) issued by the Government under section 13. A complete list of such goods can be obtained from 6th schedule of Sales tax Act 1990. Here, exemptions granted in Finance Act, 2021 (fiscal year 2021-2022) are described.
GRANT OF ZERO-RATING ON CERTAIN ITEMS
Zero-rating on local supply of raw material, components, parts and plant and machinery to registered exporters under Export Facilitation Scheme, 2021 has been granted. Moreover, milk and fat filled milk have also been included in zero-rated regime.
EXEMPTION OF SALES TAX ON WHITE SPIRIT AND SOLVENT OIL
In order to support agriculture sector, exemption has been granted on white spirit and solvent oil for manufacture of pesticides and their ingredients registered under the Agriculture Pesticides Ordinance, 1971.
EXEMPTION OF SALES TAX ON PRINTING PAPERS FOR HOLY QURAN
Currently art and printing papers are chargeable to sales tax at standard rate of 17%. The said products have been granted exemption from sales tax, if used for printing and publication of Holy Quran. Resultantly, art and printing paper along with relevant PCT headings have been inserted in S. No. 137 of Table-1 of the Sixth Schedule to the STA.
EXEMPTION OF SALES TAX ON CKD KITS FOR ELECTRIC VEHICLES
Exemption on import of CKD kits for electric vehicles has been granted to facilitate local manufacturing to introduce environment friendly and cheaper source of transportation to the general public. Accordingly, S. No. 157 has been inserted in the Sixth
Schedule to the STA.
EXEMPTION OF SALES TAX ON TEMPORARY IMPORT BY INTERNATIONAL ATHLETES
For the purpose of facilitation of international athletes, goods temporarily imported into Pakistan by international athletes or sportsmen which would be subsequently taken back by them within 120 days have been exempted from levy of sales tax. For this purpose, S. No. 158 has been inserted in the Sixth Schedule to the STA.
EXEMPTION OF SALES TAX ON IMPORTS OF AUTO-DISABLED SYRINGS AND RAW MATERIALS
To promote usage of auto disabled syringes during COVID situation in the country, tax exemption on import of auto disposable syringes and their raw material was granted till 30th June, 2021 vide Tax Laws (Second Amendment) Ordinance, 2021. Accordingly, this exemption has been incorporated at S. No. 159 and 160 of Table-1 of Sixth Schedule to the STA.
EXEMPTION OF SALES TAX ON PLANT. MACHINERY, EQUIPMENT AND RAW MATERIAL FOR SPECIAL TECHNOLOGY ZONES
To provide incentive to the IT industry in the country, import of plant, machinery, equipment and raw materials by Special Technology Zone Authority, developers and enterprises has been granted exemption by adding S. No. 161 of Table-1 of the Sixth
Schedule to the STA.
EXEMPTION OF SALES TAX AND FED ON IMPORT UNDER EXPORT FACILITATION SCHEME. 2021
For the purpose of facilitation of exporters, exemption has been granted on import of raw materials, components, parts and plant and machinery by registered persons authorized under Export Facilitation Scheme, 2021. Similarly exemption from federal
excise has also been granted on import and supply of certain items by registered persons authorized under Export Facilitation Scheme, 2021.
EXEMPTION OF SALES TAX ON LOCALLY PRODUCED SILOS
To facilitate the farmers and encourage storage of grain and agricultural activity in the rural areas, tax exemption on locally produced silos has been granted by adding S. No. 26 in the Table-2 of the Sixth Schedule to the STA.
EXEMPTION OF SALES TAX ON SUPPLY OF WHEAT BRAN
Exemption has been granted on local supply of wheat bran, which will result in facilitation of poultry industry by reduction in manufacturing cost of poultry feed.
EXEMPTION OF SALES TAX ON IMPORT OF POS MACHINES
In order to facilitate and encourage integration of teir-1 retailers, POS machines imported for installation on retail outlets as are integrated with the Board’s computerized System have been granted exemption from sales tax. Moreover, sales tax rate on textile and leather items through POS integrated retailers has been reduced from 12% to 10%.
EXEMPTION OF SALES TAX AND FED TO BORDER SUSTENANCE MARKETS
In order to mitigate the problems faced by people residing in border areas of Baluchistan and Khyber Pakhtunkhwa due to fencing and counter smuggling measures, Border Sustenance Markets are being established on the border with Iran and Afghanistan. To facilitate the said markets, exemption on certain specified items has been granted by inserting new Table-4 in the the Sixth Schedule to the STA. Similarly exemption from federal excise has also been granted on specified items meant for such
REDUCTION OF SALES TAX ON LOCALLY MANUFACTURED ELECTRIC VEHICLES:
To encourage and promote the local manufacturing of electric vehicles, reduced rate of 1 % of sales tax has been provided for these vehicles.
REDUCTION IN SALES TAX RATE ON LOCALLY MANUFACTURED MOTORCARS UPTO IQOOcc
In order to provide relief to the general body of consumers, rate of sales tax has been reduced from 17% to 12.5% on locally manufactured cars upto 1000cc.
WITHDRAWAL OF FIXED SALES TAX ON SIM CARD
Sales tax on Subscriber Identification Module (SIM) cards charged at Rs.250/- per SIM card under the provision of Table-I of the Ninth Schedule to the STA has been abolished with effect from 1st July, 2020.
EXEMPTION FROM VALUE ADDITION TAX TO ELECTRIC VEHICLES
To promote environment friendly transportation facility and to encourage cheaper source of transportation, minimum value addition tax under Twelfth Schedule is withdrawn from electric vehicles (4-wheelers) upto 50 Kwh battery in CKD/CBU condition and electric vehicle LCV upto 150 kwh batter in CKD/CBU till 30th June, 2026. Furthermore, electric vehicles 2-3 wheelers and heavy commercial vehicles in CBU condition is also excluded from the purview of value addition tax under Twelfth Schedule till 30th June, 2025.
WITHDRAWAL OF VALUE ADDED TAX ON MOTOR VEHICLES UPTO 850CC
In order to provide relief to the general body of consumers, small cars upto engine capacity of 850cc have been exempted from value added tax at import stage.
EXEMPTION FROM FEDERAL EXCISE TO INDSUTRIAL UNITS LOCATED IN FATA AND RATA
In order to facilitate the people of tribal area and encourage investment and economic growth in these areas, levy of federal excise has been withdrawn on to the industrial units located in erstwhile FATA and FATA by omitting corresponding serial
numbers in First Schedule and Second Schedule besides omitting Fourth Schedule of FEA. Corresponding amendments have also been made in the relevant provisions of the Sales tax act.
Sales Tax Act, 1990 inserted below items in 6th Schedule to provide exemption from sales tax
Import & Supply
|157||Import of CKD (in kit form) of following electric vehicles (4 wheelers) by local manufacturers till 30th June, 2026:|
(i) Small cars/SUVs with 50 Kwh battery or below; and
(ii) Light commercial vehicles (LCVs) with 150 kwh battery or below
|158||Goods temporarily imported into Pakistan by International Athletes which shall be subsequently taken by them within 120 days of temporary import||Respective headings|
|159||Import of auto disable Syringes till 30th June, 2021|
(i) with needles
(ii) without needles
|160||Import of following raw materials for the manufacturers of auto disable syringes till 30th June, 2021|
(i) Tubular metal needles
(ii) Rubber Gaskets
|161||Import of plant, machinery, equipment and raw materials for consumption of these items within Special Technology Zone by the Special Technology Zone Authority, zone developers and zone enterprises||Respective headings|
|162||Import of raw materials, components, parts and plant and machinery by registered persons authorized under Export Facilitation Scheme, 2021 notified by the Board with such conditions, limitations and restrictions.||Respective headings|
Import & Supply
Local Supply only
|26||Supply of locally produced silos till 30.06.2026||Respective heading|
|30||Fruit juices, whether fresh, frozen or otherwise preserved but excluding those bottled, canned or packaged||2009.1100, 2009.1200, 2009.1900, 2009.2100, 2009.2900, 2009.3100,|
2009.3900, 2009.4100, 2009.4900, 2009.5000, 2009.6100, 2009.6900,
2009.7100, 2009.7900, and 2009.9000
|31||Milk and cream, concentrated or containing added sugar or other sweetening matter, excluding that sold in retail packing under a brand name|
|32||Flavored milk, excluding that sold in retail packing under a brand name||0402.9900|
|33||Yogurt, excluding that sold in retail packing under a brand name||0403.1000|
|34||Whey, excluding that sold in retail packing under a brand name||04.04|
|35||Butter, excluding that sold in retail packing under a brand name||0405.1000|
|36||Desi ghee, excluding that Sold in retail packing under a brand name||0405.9000|
|37||Cheese, excluding that sold in retail packing under a brand name||0406.1010|
|38||Processed cheese not grated or powdered, excluding that sold in retail packing under a brand name||0406.3000|
|39||Sausages and similar products of poultry meat or meat offal excluding sold in retail packing under a brand name or trademark||1601.0000|
|40||Products of meat or meat offal excluding sold in retail packing under a brand name or trademark||1602.3200, 1602.3900, 1602.5000, 1604.1100, 1604.1200, 1604.1300,|
1604.1400, 1604.1500, 1604.1600, 1604.1900, 1604.2010, 1604.2020
Local Supply only
The Act further inserted following serial number in table-3 which deals with exemption of sales tax on import of plant, machinery, equipment and apparatus, including capital goods subject to certain conditions:
|21||Import of POS machines||8470.2900|
|POS machines imported for installation on retail outlets as are integrated with the Board’s computerized system for real-time reporting of sales.|
The Act also inserted a new Table-4 in the 6th Schedule to the Sales Tax Act 1990 in following manner;
The goods specified in column (2) of the Annexure below falling under the PCT codes specified in column (3) of the said Annexure, when supplied within the limits of the Border Sustenance Markets, established in cooperation with Iran and Afghanistan, shall be exempted from the whole of the sales tax, subject to the following conditions, namely: –
(i) Such goods shall be supplied only within the limits of Border Sustenance Markets established in cooperation with Iran and Afghanistan;
(ii) If the goods, on which exemption under this Table has been availed, are brought outside the limits of such markets, sales tax shall be charged on the value assessed on the goods declaration import or the fair market value, whichever is higher;
(iii) Such items in case of import, shall be allowed clearance by the Customs Authorities subject to furnishing of bank guarantee equal to the amount of sales tax involved and the same shall be released after presentation of consumption certificate issued by the Commissioner Inland Revenue having jurisdiction;
(iv) The said exemption shall only be available to a person upon furnishing proof of having a functional business premises located within limits of the Border Sustenance Markets; and
(v) Breach of any of the conditions specified herein shall attract relevant legal provisions of this Act, besides recovery of the amount of sales tax along with default surcharge and penalties involved.