FBR introduces and expands sales tax exemptions covering essential goods, electric vehicles, aviation, shipbuilding and refinery upgrades.
ISLAMABAD: The Federal Board of Revenue (FBR) has introduced and expanded a range of sales tax exemptions under the Sixth Schedule of the Sales Tax Act, 1990, for Tax Year 2027.
The FBR outlined the changes in Sales Tax Circular No. 1 of 2026, issued to explain major amendments to the Sales Tax Act, 1990 introduced through the Finance Act, 2026.
Wheat, rice bran and publications
Under the amendments, a new Serial No. 27A of Table-1 of the Sixth Schedule has been inserted to provide sales tax exemption on the import and supply of wheat and rice bran.
The FBR has also expanded an existing exemption covering newsprint and books. Magazines have now been included within the scope of the exemption under Serial No. 32 of Table-1.
The exemption on the import of completely knocked-down (CKD) kits for specified electric vehicles, previously available until June 30, 2026 under Serial No. 157, has been extended for another year until June 30, 2027.
A new Serial No. 181A has also been added to extend sales tax exemption on the import or lease of aircraft and parts thereof to airline companies registered in Pakistan.
Contraceptives and sanitary products
The FBR has restored sales tax exemption on contraceptives, which had previously been exempt under Serial No. 60 before the exemption was withdrawn in 2022.
The FBR said the exemption has been restored considering the importance of contraceptives for population control and making these products more affordable.
In another relief measure, tampons have been exempted from sales tax under Serial No. 183 of Table-1 of the Sixth Schedule.
Female sanitary pads and tampons were previously subject to the standard sales tax rate.
Shipbuilding and strategic vehicles
The government has also restored sales tax exemptions for the import of ships flying the Pakistan flag, which had been withdrawn in 2021.
The exemption has also been extended to the import of plant, machinery and other capital goods required for shipbuilding.
Sales tax exemption has further been introduced for the import of bullet-proof vehicles for the Shanghai Cooperation Organisation (SCO) Summit and counter-terrorism operations.
The measure is intended to support national security, protect state guests and ensure safe mobility. Tax-free imports of such strategic vehicles have also been allowed for high-risk and conflict-prone areas as part of counter-terrorism measures.
Sales tax relief for refinery upgrades
The FBR has also provided sales tax exemption on specified machinery, equipment and other items imported for refinery upgradation, subject to prior approval from the relevant division.
The FBR noted that refinery modernisation is necessary to align Pakistan’s domestic refining capacity with modern environmental standards, including cleaner fuel specifications, improved emission controls and lower carbon and sulphur intensity.
Although major petroleum products produced by refineries are not subject to sales tax, refineries undertaking upgradation, scheduled turnaround, maintenance and overhaul projects need to import high-value machinery, equipment and parts that are otherwise subject to sales tax.
The exemption on specified items is therefore intended to reduce the tax burden associated with refinery modernisation and facilitate investment in upgrading Pakistan’s refining infrastructure.