Islamabad, July 21, 2023 – The Federal Board of Revenue (FBR) has taken the decision to apply sales tax on goods supplied under brand names and trademarks.
The move comes as part of the major changes to the Sales Tax Act, 1990, introduced through the Finance Act, 2023.
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In a circular issued on Friday (Circular No. 02 of 2023-24), the FBR clarified that prior to the Finance Act, 2023, imports and local supplies of certain edible goods sold in retail packaging with brand names and trademarks were subject to sales tax. However, there was ambiguity when a certain quantity of such goods was considered “bulk” packaging, leading to exemptions from sales tax, even though the supply was still under a brand name or trademark.
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To address this issue and remove ambiguity, the FBR has amended the relevant entries under Table-1 and Table-2 of the Sixth Schedule. The distinction between “retail” or “bulk” packaging has been removed, making all supplies of specified goods under brand names or trademarks liable to sales tax.
The items affected by this new tax regulation include red chilies, ginger, turmeric, yogurt, butter, desi ghee, cheese, processed cheese (not grated or powdered), products of meat or meat offal, meat of bovine animals, sheep, goat, uncooked poultry meat, fish, and crustaceans.
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This move by the FBR is aimed at ensuring a more transparent and consistent approach to taxing goods sold under brand names and trademarks. The revised tax regulations will have implications for businesses and consumers involved in the production and distribution of these specified goods.
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