Karachi, June 12, 2025 – In a significant move to tighten control over pricing and enhance tax collection, the Federal Board of Revenue (FBR) has been granted the authority to determine the retail price of goods listed under the Third Schedule of the Sales Tax Act, 1990.
According to an explanatory commentary on the Finance Bill 2025 by PwC A.F. Ferguson & Co., the proposed amendment empowers the FBR to officially fix the retail price of specified items through a notification in the Official Gazette. This marks a major shift from the existing system where manufacturers and importers declared retail prices independently, often leading to disputes and underreporting.
The proposed changes aim to address valuation concerns, especially with regard to imported goods. For Third Schedule imports, the retail price must now be at least 130% of the assessed customs value under Section 25 of the Customs Act, 1969. This valuation will also include applicable customs duties and federal excise duty. The objective is to prevent undervaluation and ensure that the correct amount of sales tax is charged at the retail price level.
Another notable development pertains to the beverage sector. In line with FBR’s 1994 guidance, suppliers of aerated waters were previously allowed to exclude chilling charges—ranging from 5% to 10% of the consumer price—when calculating the retail price for sales tax purposes. The Finance Bill 2025 now seeks to codify this mechanism into law, introducing a standardized deduction of 5% for chilling charges on aerated drinks, mineral water, fruit juices, and similar beverages.
By embedding these rules into legislation, the government aims to introduce greater transparency, consistency, and fairness in determining retail prices of taxable goods. The move is expected to strengthen revenue collection while reducing ambiguities and compliance issues for businesses dealing in Third Schedule products.