Govt considering withdrawal of sales tax exemptions

Withdrawal of sales tax exemptions by FBR through 4th amendment

The government is considering over a presidential ordinance to withdraw sales tax exemptions, zero-rating, and reduced sales tax rates to the tune of Rs330 billion within the next 10 to 15 days, according to a report by Business Recorder.

The possible ordinance if promulgated in the next 10-15 days, would be called Tax Laws (4th Amendment) Ordinance, 2021. The exemptions are expected to increase the FBR’s revenue collection target for the current fiscal year (FY22).

However, the report said that sales tax exemptions, sales tax zero-rating and all kinds of reduced sales tax rates may be subjected to standard rate of 17 per cent sales tax. The government will also withdraw all kinds of sales tax zero-rating except exports.

In this regard, the report claimed that the government has assigned Federal Board of Revenue (FBR), Law Division and Finance Ministry to start working on the drafting of the Presidential Ordinance. Mainly, Law Ministry and FBR would work on the said assignment.

Presently, the FBR has set a revenue collection target of Rs5,829 billion for the year FY22. Furthermore, the report also claimed that the government may impose a 17 per cent sales tax on cellular mobile phones in CKD/CBU form under the Ninth Schedule of the Sales Tax Act 1990.

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