The government is likely to slap a standard rate of 18 percent sales tax on most of the sales tax-exempted goods and sales tax zero-rated items from July 1, 2024.
A proposal is under consideration to impose an 18 percent sales tax on many items presently charged at the rate of zero percent under the Sales Tax Act 1990.
The FBR is reviewing the entire list of zero-rated items and sales tax-exempted items for the purpose of charging sales tax on them.
Presently, stationary products and dairy items are subjected to sales tax at the rate of zero percent. Some stationary items are also exempted from sales tax. The proposal is to withdraw the sales tax zero-rating/exemption and subsequently charge 18 percent sales tax on these items.
Another proposal is to impose a lower rate of sales tax on these items but there is a strong likelihood to charge a standard rate on these goods.
Sources told ProPakistani that the FBR is also reviewing sales tax exemption on fertilizers as well as tractors, but the final decision has yet to be taken.
Presently, Petroleum Crude Oil is zero-rated under the sales tax regime. If the sales tax zero-rating is withdrawn from Petroleum Crude Oil, the item may be subjected to an 18 percent sales tax.
The pesticides and their active ingredients, registered by the Department of Plant Protection, are exempted from sales tax. If the sales tax exemption is withdrawn from pesticides, it would be subjected to 18 percent sales tax unless a lower rate is specifically notified for this item.
Similarly, the import and supply of iodized salt bearing brand names and trademarks whether or not sold in retail packing.
A sales tax exemption also applies to liquefied natural gas imported by fertilizer manufacturers for use as feedstock.
The government may retain the zero-rated sales tax on supplies to diplomats, diplomatic missions, privileged persons, and privileged organizations.
