Green industry in Pakistan defined for Tax Year 2024

Green industry in Pakistan defined for Tax Year 2024

Green industry in Pakistan has been defined for Tax Year 2024 under updated Sales Tax Act, 1990 released by Federal Board of Revenue (FBR).

In a significant move towards promoting sustainable practices and environmentally friendly businesses, the Federal Board of Revenue (FBR) in Pakistan has defined the green industry for Tax Year 2024 under the updated Sales Tax Act, 1990. The updated act, covering the period up to June 30, 2023, outlines the criteria for categorizing an industry as ‘green’ and eligible for certain tax benefits.

According to the newly introduced provisions in the Sixth Schedule of the Sales Tax Act, 1990, the green industry is defined concerning the entry at serial number 150. The definition aims to encourage the establishment of new industrial undertakings that meet specific criteria, fostering environmentally sustainable practices and innovations.

The green industry, as per the updated act, is characterized by the following conditions:

(a) New Industrial Undertaking:

(i) The industrial facility must be set up on land that has not previously been utilized for any commercial, industrial, or manufacturing activity. The land should be free from constraints imposed by any prior work.

(ii) The establishment should be built without demolishing, revamping, renovating, upgrading, remodeling, or modifying any existing structure, facility, or plant.

(iii) It should not be formed by the splitting up or reconstitution of an undertaking already in existence or by the transfer of machinery, plant, or building from an undertaking established in Pakistan before the commencement of the new business. Additionally, it should not be part of an expansion project.

(iv) The industrial undertaking should utilize a process or technology that has not been used in Pakistan before and is approved by the Engineering Development Board.

(b) Approval by the Commissioner:

The industrial undertaking must be approved by the Commissioner, and the approval process requires the submission of an application in the prescribed form and manner. The application should be accompanied by the prescribed documents and any other documents as may be required by the Commissioner.

The definition and criteria outlined above will be applicable from July 1, 2019, onwards, providing clarity to businesses and investors interested in contributing to the green industry.

This initiative aligns with the global push towards sustainability and acknowledges the importance of adopting eco-friendly practices in industrial operations. By incentivizing the establishment of green industries, the government aims to create a conducive environment for innovative and sustainable business practices while addressing environmental concerns.

The move is expected to attract investments in sectors that align with the green industry criteria, fostering economic growth in a sustainable and responsible manner. The focus on new industrial undertakings and the use of advanced technologies not previously employed in Pakistan reflects the government’s commitment to promoting innovation and reducing the environmental impact of industrial activities.

In conclusion, the defined criteria for the green industry in Pakistan for Tax Year 2024 marks a significant step towards aligning economic development with environmental sustainability. The incentives provided under the updated Sales Tax Act, 1990 are expected to drive positive changes in the industrial landscape, encouraging the adoption of green practices and technologies. This move positions Pakistan as a forward-thinking player in the global drive towards a greener and more sustainable future.