The Federal Board of Revenue (FBR) has issued the updated Sales Tax Act, 1990 and Federal Excise Act up to June 30, 2023, to incorporate amendments made in the sales tax law through the Finance Act 2023.
The FBR, on Wednesday, issued the amended Sales Tax Act, 1990 and the Federal Excise Act up to June 30, 2023.
The updated Act said that where taxable supplies are made to a person who has not obtained a registration number or he is not an active taxpayer, there shall be charged, levied and paid a further tax at the rate of 4 percent of the value.
The revised Sales Tax Act stated that the Directorate General of Digital Initiatives shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
The amended law has also issued a detailed procedure for Alternative Dispute Resolution.
The Act has specified that any person who manufactures, possesses, transports, distributes, stores or sells goods or class of goods as specified by the Board with counterfeited tax stamps, banderoles, stickers, labels or barcodes or without tax stamps, banderoles, stickers, labels or barcodes, such [specified goods] shall be liable to outright confiscation.
The review of the updated Act revealed that the sales tax zero-rating will apply on imports or supplies made by, for or to a qualified investment as specified at Serial No.1 of the First Schedule to the Foreign Investment (Promotion and Protection) Act, 2022 for the period as specified in the Second Schedule to the said Act.
The sales tax law has also clarified that for removal of doubt, it is clarified that the blood transfusion sets not packed in aluminum foil imported with blood bags CPDA-1, in corresponding quantity in the same consignment are also exempt from sales tax.
The sales tax exemption would be available on supplies and imports of plant, machinery, and equipment for installation in tribal areas and of industrial inputs by the industries located in the tribal areas, as defined in the Constitution, as made till June 30, 2024.
The sales tax exemption has been allowed on the supplies of electricity, as made from the day of assent to the Constitution (Twenty-fifth Amendment) Act, 2018, till June 30, 2024 to all residential and commercial consumers in tribal areas, and to such industries in the tribal areas which were set and started their industrial production before 31st May, 2018 excluding certain sectors.
One percent sales tax would be applicable on the substances registered as drugs under the Drugs Act, 1976 (XXXI of 1976) and medicaments as are classifiable under chapter 30 of the First Schedule to the Customs Act, 1969 (IV of 1969) except the following, even if medicated or medicinal in nature, namely:- (a) filled infusion solution bags imported with or without infusion given sets; (b) scrubs, detergents and washing preparations; (c) soft soap or no soap; (d) adhesive plaster; (e) surgical tapes; (f) liquid paraffin; (g) disinfectants, and (h) cosmetics and toilet preparations. This substitution shall be deemed to have been made from the 1st day of July, 2022. This is subject to the condition that (i) Tax charged and deposited by the manufacturer or importer, as the case may be, shall be a final discharge of tax in the supply chain (ii) No input tax shall be adjusted in the supply chain.
One percent sales tax would be applicable on the Raw materials for the basic manufacture of pharmaceutical active ingredients and for the manufacture of pharmaceutical products, provided that in case of import, only such raw materials shall be entitled to a reduced rate as specified in column (4) which are liable to customs duty not exceeding eleven percent ad valorem, either under the First Schedule or Fifth Schedule to the Customs Act, 1969 (IV of 1969) or under a notification issued under section 19 thereof. Subject to the conditions that: (i) DRAP shall certify item-wise requirement of manufacturers of drugs and APIs and in case of import shall furnish all relevant information to Pakistan Customs Computerized System; and (ii) No input tax shall be adjusted in the supply chain.
