Karachi, August 10, 2024 – Pakistan has granted a sales tax exemption on the import of gold under the entrustment scheme. The Federal Board of Revenue (FBR) announced the tax exemption, which has been introduced through the Finance Act, 2024. The exemption is part of broader changes made to the Sixth Schedule of the Sales Tax Act, 1990.
The entrustment scheme, initially introduced on September 2, 2013, allows for the export of jewelry and related articles made from imported precious metals. These metals are supplied as partial advance payment by foreign buyers, with the quantity to be used, including wastage, specified for the manufacturing of the jewelry to be exported.
This scheme was designed to support Pakistan’s jewelry export sector by facilitating the import of precious metals for use in manufacturing, thus promoting the industry’s growth. The sales tax exemption now granted is expected to further incentivize the export of jewelry by reducing the cost burden on manufacturers and exporters.
The FBR has clarified that the exemption applies specifically to the gold imported under this scheme, ensuring that the precious metal used in the creation of export-bound jewelry is not subject to the usual sales tax. This move is likely to benefit exporters by lowering production costs and enhancing their competitiveness in the global market.
Industry experts have welcomed the decision, noting that it aligns with the government’s broader objective of boosting exports and supporting local industries. The exemption is expected to stimulate activity in the jewelry manufacturing sector, potentially leading to increased exports and foreign exchange earnings for the country.
The changes made to the Sixth Schedule of the Sales Tax Act, 1990, reflect the government’s ongoing efforts to create a more favorable environment for exporters and to address the challenges faced by key sectors of the economy.
As the new tax exemption takes effect, stakeholders in the jewelry industry are optimistic about the potential for growth and expansion. The FBR’s decision is seen as a positive step towards fostering a more robust export sector, with the entrustment scheme playing a central role in achieving this goal.
