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Tag: sales tax

  • Budget 2022/2023: Salient features of sales tax

    Budget 2022/2023: Salient features of sales tax

    ISLAMABAD: Following are the salient features of amendment made to Sales Tax Act, 1990 through Finance Bill, 2022.

    The proposed budgetary measures pertaining to Sales Tax for FY 2022-23 are:

    RELIEF MEASURES:

    1. The condition of CNIC/NTN in case of supply to unregistered persons have been removed.

    READ MORE: Budget 2022/2023: Salient features of income tax

    2. Sales Tax exemption has been granted on import and supply of all types of seeds.

    3. Sales Tax on Tractor is withdrawn.

    4. Exemption has been granted on imports by UN diplomats/diplomatic missions and privileged persons.

    5. Import and supply of solar panels (PV module) has been exempted from sales tax.

    6. Goods imported by or donated to non-profit charitable hospitals have been exempted. Furthermore, goods supplied to charitable hospitals of fifty beds or more have also been exempted from sales tax.

    7. Temporary imports have been exempted from the levy of the sales tax.

    READ MORE: Pakistan allocates Rs800 billion for FY23 PSDP

    8. Made up jewellery has been made chargeable to 3 per cent fix tax on local supply and 4 per cent fix tax on imports.

    9. Plant and machinery imported by power generation projects that entered into implementation agreement with GoP has been exempted from sales tax.

    10. Rs.90 per kg is reduced to Rs.60 per kg on potassium chlorate.

    11. Import by EPZ has been exempted from sales tax.

    READ MORE: Federal government presents budget 2022-2023

    REVENUE MEASURES:

    12. The scope of further tax has been enhanced to include non-active taxpayers as well.

    13. Regime of other then Tier-1 retailers has been streamlined.

    14. VAT has been imposed on compressor scrap, motor scrap and copper cutting scrap even when imported by manufacturers.

    READ MORE: Tax exemptions cost Rs1.76 trillion in FY22

  • Pakistan may increase normal sales tax rate to 18%

    Pakistan may increase normal sales tax rate to 18%

    Pakistan is likely to increase sales tax rate to 18 per cent in the federal budget 2022-2023, which is scheduled on June 10, 2022. The existing normal sales tax rate is 17 per cent.

    According to Budget Preview 2022/2023 issued on Thursday, analysts at Arif Habib Limited said the government is considering to raise an additional Rs400 billion – Rs450 billion during next fiscal year 2022/2023.

    READ MORE: PM Shehbaz assures favorable measures on CNIC requirement

    For this purpose, the analysts said, the government plans to raise revenue from the following measures:

    • Increase in general sales tax (GST) from 17 per cent to 18 per cent
    • Increase in GST on fertilizer products from 2 per cent to 17 per cent
    • Increase in corporate tax rate / windfall levy by 3 per cent
    • Incremental super tax of 3 per cent on commercial banks
    • Increase in personal income tax
    • Increase in federal excise duty (FED) by Rs 500/ ton on cement
    • Increase in FED on tobacco
    • Increase in Customs Duty from 2 per cent to 6 per cent on edible oil imports
    • FBR’s administrative measures
    • Imposition of additional taxes on real estate.

    The analysts said that the fiscal policy should remain supportive of the economy in the short term, with targeted measures to collect tax and reduce expenditure, backed by credible medium –term fiscal consolidation plan.

    READ MORE: New tax measures likely in budget 2022-2023

    “However, in short term, need of the hour is taking tough fiscal measures given the tight fiscal situation.”

    Pakistan achieved total revenue growth of 18 per cent during the first nine months (July – March) 2021/2022 to Rs5.4 trillion up from Rs4.6 trillion in the corresponding months of the last fiscal year, which comes out to be 9.2 per cent of the GDP against 9 per cent in the same period last year.

    The analysts said that the total tax revenue collection was up by 33 per cent year on year (YoY) to Rs4.82 trillion while non-tax revenue of Rs1.05 trillion, displayed a decline of 14 per cent YoY.

    READ MORE: Pakistan Budget 2022-2023 – estimates

    The government expects the tax revenue collection to settle at Rs 7.9 trillion for FY23b, a jump of 19 per cent YoY compared to tax revenue of pKR 6.6 billion for FY22E. Likewise, to ensure prudent fiscal management, IMF also proposed stringent FBR tax revenue target of Rs 7.26 trillion compared to Rs 6.1 trillion for FY22E, which is much needed given the overall fiscal situation of the economy. Also, from the government’s standpoint, in order to ensure growth moderation, the analyts believe that the government will not shy away from putting additional major tax burden on the different economic classes of the community and might take some non-populous taxation measures in order to ensure the same.

    The government is planning to raise an enormous total tax collection target of Rs 7.9 trillion through new taxes worth Rs 400-450 billion, additional taxes on higher income salary bracket, raising Rs 4.7 trillion through indirect tax measures, and the rest is likely to be collected from administrative measures and by bringing more people under the tax net. They believe direct tax collection will likely increase due to broadening tax base as government would be targeting to increase the number of income tax filers in the upcoming year.

    READ MORE: Compliance cost much higher for corporatization: PSX

    Indirect tax contributes around 60 per cent to the overall tax revenue coming in mainly from three major heads including Custom Duty, Sales tax and Federal Excise Duty which contributed around 25 per cent, 67 per cent and 8 per cent, respectively to the total indirect tax collection during 9MFY22. Share of sales tax and custom duty increased in 9MFY22 due to surge in imports of various commodities amid an uptick in aggregate demand of the economy. Going forward, indirect tax contribution is likely to increase by almost 20 per cent (Rs 4.7 trillion) in FY23B due to higher sales tax while higher import bill is likely to earn more tax revenue from custom duties.

    Government expects non-tax revenue collection to increase by 12 per cent to Rs 1.6 trillion in FY23 with Petroleum Development Levy (PDL) expected to settle at around Rs 500 billion. The analysts at Arif Habib Limited believe the collection in lieu of PDL is likely to be higher YoY in FY23 with an assumption that government increases it by Rs – 22/litre on MS and HSD. Currently PDL stands at Rs 125 billion during 9MFY22. Another constituent that is likely to support the overall non-tax revenue is expected to be State Bank’s profits. They expect it will be more than last year’s number mainly due to higher interest rates during July – March 2021/2022.

  • Sales tax collection from POL products falls by 40%

    Sales tax collection from POL products falls by 40%

    ISLAMABAD: The Federal Board of Revenue (FBR) has recorded a decline of 40 per cent in sales tax (ST) collection on petroleum (POL) products during the first half of the current fiscal year, according to official documents made available to PkRevenue.com

    According to the official statistics, the collection of sales tax fell to Rs69 billion during July – December of fiscal year 2021/2022 as compared with Rs114.60 billion collected in the same period of the last fiscal year.

    READ MORE: Share of sales tax collection increases to 43.7% in 1HFY22

    The decline in revenue collection from petroleum products mainly attributed to lower rates of sales tax kept by the government in order to provide relief to the masses by not passing on the actual increase in petroleum prices as surge in international markets.

    The flat rate of sales tax is 17 per cent. However, the government decided to keep the rate of sales tax on petroleum products to the minimum level. According to SRO 1839i0/2022 issued on February 10, 2022, the sales tax rates have been reduced as: petrol 0.79 per cent; high speed diesel 3.17 per cent, kerosene oil 5.30 per cent and light diesel oil at zero per cent.

    READ MORE: FBR extends sales tax return filing up to February 25

    The fall in sales tax collection from supply of petroleum products resulted decline in collection of sales tax on domestic supply.

    The overall sales tax collection on domestic supplies fell by 6.2 per cent to Rs382.68 billion during the first half of the current fiscal year as compared with Rs408.13 billion in the corresponding period of the last fiscal year.

    However, the fall in sales tax collection domestic was offset by the massive growth in collection of sales tax on imports. The sales tax collection on imports surged by 75.4 per cent to Rs892.30 billion during the first half of the current fiscal year as compared with Rs508.61 billion in the corresponding half of the last fiscal year.

    READ MORE: FBR announces promotion of BS-16 Customs officers

    The growth in sales tax collection on imports can be attributed to sharp jump in imports and massive decline in rupee value.

    The import bill of the country registered a growth of 66.23 per cent to $40.65 billion during first half of the current fiscal year as compared with $24.45 billion in the corresponding half of the last fiscal year.

    READ MORE: FBR makes rules for sealing retail outlets

    Similarly, the Pak Rupee (PKR) fell sharply by Rs18.97 to the dollar during the first half of the current fiscal year. The rupee ended down by 12.04 per cent from Rs157.54 to the dollar on June 30, 2021 to Rs176.51 on December 31, 2021.

    The overall sales tax collection however, recorded 39.1 per cent to Rs1.27 trillion during the first half of the current fiscal year as compared with Rs916 billion in the corresponding half of the last fiscal year.

  • FBR slashes sales tax rates on petrol, HSD

    FBR slashes sales tax rates on petrol, HSD

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday slashed sales tax rates on petrol and high speed diesel (HSD) in order to reduce the impact of high oil prices at consumer end.

    The FBR issued SRO 88(I)/2022 dated January 18, 2022 to notify changes the sales tax rates on supply of petroleum products.

    The sales tax on supply of petrol has been reduced to 2.5 per cent ad valorem from 4.77 per cent. Similarly, the rate of sales tax on supply of high speed diesel has been reduced to 5.44 per cent from 9.08 per cent.

    The FBR kept unchanged the sales tax rates on kerosene and light diesel oil at 8.30 per cent and 2.70 per cent, respectively.

    The revenue body previously issued SRO 01(I)/2022 dated January 3, 2022 to change the rate of sales tax on petroleum products.

    Earlier on January 15, 2022, the government announced to increase prices of all petroleum products for next fortnight.

    READ MORE: Pakistan’s petrol price rises to record high at Rs147.83

    According to the notification, the price of petrol has been increased by Rs3.01 to Rs147.83 per liter from Rs144.82.

    The price of high speed diesel (HSD) has been increased by Rs3 to rs144.62 per liter from Rs141.62.

    The rate of kerosene has been enhanced by Rs3 to Rs116.48 per liter from Rs113.48.

    The price of light diesel oil has been increased by Rs 3.33 toRs114.54 per liter from Rs111.21.

    According to a notification issued by the Finance Division on January 15, 2022, the decision to enhance domestic prices of petroleum products because the international oil price had registered 6.2 per cent during the last week. Presently, at the highest level since last year.

    READ MORE: Prices of all POL products increased to wish New Year

    The existing sales tax rate and petroleum levy on various petroleum products are much below the budgeted targets.

    The finance ministry said that against the recommendations of Oil and Gas Regulatory Authority (OGRA) for increase of Rs5.52 per liter in petrol and Rs6.19/liter in high speed diesel prices, the Prime Minister had directed to absorb at the international prices through further cut in sales tax from last fortnight.

    “The finance ministry will take Rs2.6 billion revenue hit due to reduced sales tax rates,” it added.

    Therefore, the government has decided to make partial increase in the prices of the petroleum products in order to provide relief to the end consumers.

  • FBR raises sales tax on all petroleum products

    FBR raises sales tax on all petroleum products

    ISLAMABAD: The Federal Board of Revenue (FBR) on Monday notified an increase in sales tax on all the petroleum products.

    The FBR issued SRO 01(I)/2022 to notify increase in sales tax rates on petroleum products. The FBR amended the rates of sales tax, which were issued previously through SRO 1604(I)/2021 on December 16, 2021.

    READ MORE: Prices of all POL products increased to wish New Year

    According to the latest notification enhanced the sales tax on petrol from 1.63 per cent to 4.77 per cent.

    The sales tax rate on high-speed diesel has been increased to 9.08 per cent from 7.37 per cent.

    The FBR enhanced the sales tax on kerosene oil to 8.30 per cent from 8.19 per cent. Likewise, the sales tax on light diesel has been increased to 2.70 per cent from 0.46 per cent.

    The government on December 31, 2021 increased prices of all petroleum products effective from January 01, 2022.

    READ MORE: Petrol price reduces to Rs140.82 per liter

    The prices have been increased across the board around Rs4 per liter on all the products.

    According to a notification issued by the finance division, the new price of petrol has been increased by Rs4 to Rs144.82 per liter from Rs140.82. The rate of high-speed diesel (HSD) has been increased by Rs4 to Rs141.62 per liter from Rs137.62. Similarly, the price of kerosene has been increased by Rs3.95 to Rs113.53 per liter from Rs109.53. Likewise, the price of light diesel oil has been increased by Rs4.15 to Rs111.06 per liter from Rs107.06.

    READ MORE: SBP revises manual on remittances for petroleum sector

    The notification stated that in the fortnightly review of petroleum products prices, the prime minister had rejected the proposal of Oil and Gas Regulatory Authority (OGRA) for an increase in prices of petroleum products and advised to increase only Rs4 per liter to meet the petroleum levy target agreed with the International Monetary Fund (IMF).

    “Sales tax on petrol and diesel has been adjusted downwards as compared to December 16, 2021, to keep the prices lower,” the notification stated.

  • FBR notifies increase in sales tax on petrol, HSD

    FBR notifies increase in sales tax on petrol, HSD

    The Federal Board of Revenue (FBR) has announced an increase in sales tax on the supply of petrol and high-speed diesel (HSD), as outlined in the recently issued SRO 1640(I)/2021.

    (more…)
  • FBR hikes sales tax rates on petroleum products

    FBR hikes sales tax rates on petroleum products

    The Federal Board of Revenue (FBR) has issued a notification, SRO 1579(I)/2021, announcing revisions in the sales tax rates on various petroleum products, excluding petrol.

    (more…)
  • Industry protests over 20% additional ST on electricity

    Industry protests over 20% additional ST on electricity

    KARACHI: Industry has strongly protested over imposition of 20 per cent additional sales tax on supply of electricity and said it will destroy the industrial activities and result in mass unemployment.

    Faisal Moiz Khan, President, North Karachi Association of Trade & Industry (NKATI) in a statement on Saturday expressed deep concerns over the imposition of 20 per cent additional sales tax on electricity bills by K-Electric and by strongly protested.

    He demanded the government to withdraw the increase immediately and K-Electric should be stopped from looting the industrial community.

    The imposition of additional taxes on electricity will lead to destruction and a flood of unemployment.

    In a statement, NKATI president said that 20 per cent additional sales tax has been levied on the electricity bills sent to industries by K-Electric.

    While KE is already levying 17 per cent sales tax on electricity bills, so there is no justification for imposing an additional 20 per cent sales tax.

    “Forcible collection of additional sales tax from registered consumers in sales tax is a total injustice which will increase the cost of production immensely. Which will have a very bad effect on the country’s exports and industrial production activities”, he said.

    Faisal Moiz Khan demanded the government to take notice of the imposition of 20% additional sales tax on electricity bills by K-Electric and withdraw this decision immediately and provide a conducive business and industrial environment in line with Prime Minister Imran Khan’s vision of making it easier to do business and run industries. Otherwise, it will be impossible for industrialists to run their own factories

    NKATI president further said that if the government wants industries to flourish and create more employment opportunities, then anti-business and anti-industrial measures must be avoided, so that the domestic industries can get back on their feet in the face of the dire economic situation due to COVID-19 pandemic.

  • Sales tax on petrol slashed to 6.84%

    Sales tax on petrol slashed to 6.84%

    In a move aimed at providing relief to consumers, the federal government has announced a reduction in the sales tax rates on the supply of petrol and high-speed diesel (HSD).

    (more…)
  • Sales tax on high speed diesel reduced by 31.5%

    Sales tax on high speed diesel reduced by 31.5%

    ISLAMABAD: The federal government has announced a reduction of sales tax rate by 31.5 per cent on supply of High Speed Diesel (HSD). The rate sales tax on HSD has been reduced in order to lower the impact of higher prices pass on to the consumer.

    The Federal Board of Revenue (FBR) issued SRO 1225(I)/2021 dated September 18, 2021 to notify the reduction in sales tax on HSD.

    According to the SRO the sales tax rate on HSD has been reduced to 11.64 per cent from previous level of 17.00 per cent.

    Previously, the FBR issued SRO 1072(I)/2021 dated August 26, 2021 to revise the sales tax on petroleum products.

    In the latest SRO only sales tax rate on HSD has been reduced. The sales tax rates on other petroleum products have been kept unchanged. The sales tax rates on petroleum products are: Petrol 10.54 per cent; HSD 11.64 per cent; Kerosene oil 6.70 per cent; Light Diesel Oil 0.20 per cent.

    It is worth mentioning that the federal government on September 15, 2021 announced an increase in the prices of petroleum products.

    With the announcement the petrol prices have gone up to the all-time high level. However, it is even more important that the sales tax rates are on the lowest side when compared with the rates applicable during year 2015.

    The government has increased latest prices owing to fluctuations in petroleum prices in the international market and exchange rate variation.

    Following are the rates of petroleum products, which will take effect from September 16, 2021:

    The rate of petrol has been increased by Rs5 to Rs123.30 per liter from Rs118.30.

    The rate of high-speed diesel has been increased by Rs5.01 to Rs120.04 per liter from Rs115.03.

    The rate of kerosene oil has been increased by Rs5.46 to Rs92.26 per liter from Rs86.80.

    The rate of light diesel oil has been increased by Rs5.92 to Rs90.69 from Rs84.77.

    In the latest SRO 1225(I)/2021 dated September 18, 2021, the sales tax rates on petroleum products are: Petrol 10.54 per cent; HSD 11.64 per cent; Kerosene oil 6.70 per cent; Light Diesel Oil 0.20 per cent.

    The present sales tax rates on petroleum products are much lower when compared with sales tax rates prevailed about six years ago. The FBR issued SRO 963(I)/2015 dated September 30, 2015. The sales tax rates under this SRO are: Petrol 26 per cent; Kerosene 30 per cent; High Speed Diesel 50 per cent; Light Diesel Oil 29.50 per cent.

    Petrol price increased to all-time high at Rs123.30/liter