Karachi, February 3, 2025 – The Federal Board of Revenue (FBR) has revised and clarified the procedure for obtaining a sales tax exemption on imports, ensuring a streamlined process for entitled organizations and agencies.
According to the FBR, the procedure for availing a sales tax exemption is outlined in Rule 57B of the Sales Tax Rules, 2006. This rule provides a step-by-step framework to facilitate eligible entities in securing an exemption.
Procedure for Availing Sales Tax Exemption
1. Application for Exemption Certificate
Any organization or agency eligible for a sales tax exemption must submit a formal application to the relevant Inland Revenue officer. This application must include an original exemption order issued by the Economic Affairs Division, following the format specified by the Board. The exemption order should detail:
o A precise description of the goods, including specifications and intended use.
o The quantity and total value of the goods.
o Reference details, including the Board’s consent under Rule 57A.
2. Verification and Authorization Process
The Inland Revenue officer will retain the original exemption order for official records. Upon verification that the purchase request is genuine, the officer will issue an Authorization for Exempt Supply within 15 days. This authorization, granted to either an importer or a registered supplier, explicitly states that only the sales tax on the final transaction shall be exempt. However, the officer may deny the exemption if there are valid reasons to believe that the purchase does not qualify under grant-in-aid provisions.
3. Processing of Exempt Imports and Supplies
Once the Authorization for Exempt Supply is issued, the concerned Collector of Customs or registered supplier will facilitate the tax-exempt import or supply, maintaining appropriate records for verification by the Inland Revenue Department.
4. Refund Claims for Unauthorized Exemptions
If an eligible organization or agency completes an import or purchase without securing the required authorization, the Economic Affairs Division may submit a refund claim for the paid sales tax. The claim will be processed in accordance with the relevant legal provisions, provided it meets the stipulated exemption conditions.
This updated procedure reinforces transparency and efficiency in availing a sales tax exemption, benefiting organizations that qualify under the established criteria.