Tax Expenditure Report 2026 highlights exemption under Entrustment Scheme to support value-added jewellery exports
ISLAMABAD: The Federal Board of Revenue (FBR) granted Rs1.56 billion in sales tax exemptions on the import of gold under the Entrustment Scheme, according to the Tax Expenditure Report 2026, as part of the government’s efforts to strengthen Pakistan’s export-oriented jewellery industry.
The report states that the exemption was introduced through the Finance Act, 2024 by amending the Sixth Schedule of the Sales Tax Act, 1990, with the objective of reducing production costs for exporters and enhancing the global competitiveness of Pakistan’s value-added jewellery sector.
Under the scheme, the sales tax exemption applies exclusively to gold imported for the manufacture of jewellery intended for export, ensuring that precious metals used in export production remain free from sales tax.
Export-oriented incentive
The Entrustment Scheme was originally introduced on September 2, 2013, to facilitate exports of jewellery and other products manufactured from imported precious metals.
Under the mechanism, overseas buyers provide precious metals as partial advance payment, while the quantity of gold to be utilised, including permissible manufacturing wastage, is determined in advance for producing jewellery exclusively for export markets.
The arrangement enables manufacturers to import gold without requiring substantial upfront capital, helping exporters improve cash flow and expand value-added production.
Boosting competitiveness
According to the FBR, the Rs1.56 billion sales tax expenditure reflects the government’s policy of supporting export-led industries by lowering input costs and improving their competitiveness in international markets.
Industry experts believe the exemption will ease liquidity constraints for jewellery manufacturers and exporters while making Pakistani products more competitive in regional and global markets.
The incentive is also expected to encourage greater investment in value-added jewellery manufacturing, helping exporters increase foreign exchange earnings through higher exports.
Part of broader tax reforms
The FBR said the exemption forms part of broader tax policy measures introduced through the Finance Act, 2024, which amended the Sixth Schedule of the Sales Tax Act, 1990 to provide targeted tax relief to strategic sectors of the economy.
The Tax Expenditure Report 2026 outlines the fiscal cost of such exemptions while highlighting the government’s strategy of using tax incentives to promote exports, industrial development and economic growth.
According to the report, the continuation of the Entrustment Scheme, combined with sales tax relief on imported gold, is expected to further strengthen Pakistan’s jewellery export industry by reducing production costs and encouraging higher value-added exports to international markets.