Finance Act, 2024: Sales Tax Exemption on Gold Import

Finance Act, 2024: Sales Tax Exemption on Gold Import

Karachi, July 2, 2024 – The Pakistani government has introduced a significant change in its tax regime through the Finance Act, 2024, by exempting sales tax on the import of gold under the entrustment scheme. This move aims to facilitate the import of gold, which is expected to have positive implications for the jewelry industry and the overall economy.

According to the comments on the Finance Act, 2024, released by A. F. Ferguson & Co. Chartered Accountants, several new exemptions have been introduced under the sales tax laws. The exemptions include the supply and import of specific goods, which will no longer be subjected to the levy of sales tax.

The exemptions outlined in the Finance Act, 2024, include:

1. Supply of Electricity to Azad Jammu and Kashmir: This exemption aims to reduce the financial burden on consumers in Azad Jammu and Kashmir by making electricity more affordable.

2. Import of Gold under Entrustment Scheme (SRO 760(I)/2013): This significant exemption is expected to benefit the jewelry industry by reducing costs associated with the import of gold, thereby promoting local manufacturing and exports.

3. Import of Specific Medicines: The import of cystagon, cysta drops, and trientine capsules, specifically for personal use, is now exempt from sales tax under tariff heading 3004.9099. This exemption will provide financial relief to patients requiring these medications.

4. Bovine Semen (0511.1000): This exemption is likely to support the livestock and dairy sectors by reducing costs for farmers and encouraging the use of advanced breeding techniques.

Additionally, the Finance Act, 2024, has modified the proposal from the Finance Bill, 2024, regarding the exemption of sales tax on the supply of milk. Initially, the proposal aimed to exempt milk (excluding that sold under a brand name) from the levy of sales tax. The final version of the Finance Act has expanded this exemption to include milk supplied by corporate dairy farms, thereby broadening the scope and impact of the exemption.

However, the scope of exemptions proposed in the Finance Bill for the supply and import of iron and steel scrap has been restricted through the Finance Act. Specifically, supplies made by manufacturer-cum-exporters of recycled copper authorized under the Export Facilitation Scheme, 2021, have been excluded from the scope of the exemption. This restriction aims to streamline tax benefits and ensure they are targeted toward specific sectors that contribute to export growth.

These changes reflect the government’s strategic approach to tax policy, focusing on stimulating economic activity in key sectors, reducing costs for consumers and businesses, and promoting exports. The sales tax exemption on the import of gold, in particular, is expected to have a significant positive impact on the jewelry industry, enabling it to compete more effectively in international markets and contribute to economic growth.