The Federal Board of Revenue (FBR) has announced the deferral of the imposition of sales tax on the retail sale of sugar until December 1, 2021.
The decision comes as part of an effort to address concerns related to the rising prices of sugar in the domestic market.
The FBR officially issued SRO 989(I)/2021, outlining the deferment of the implementation of sales tax on the retail sale of sugar for a period of five months. The sales tax on sugar retail sale, as introduced through the Finance Act, 2021, was initially set to be applicable from July 1, 2021.
According to the SRO, the deferment means that sales tax on sugar retail sale shall not be applicable for the period starting from July 01, 2021, and ending on November 30, 2021. This decision provides temporary relief to both consumers and businesses engaged in the sugar trade.
The amendment to the Sales Tax Act, 1990, brought sugar into the Third Schedule of the act through the Finance Act, 2021. With this amendment, sales tax on sugar would be collected based on the retail price, marking a significant change in the taxation structure for this commodity.
Despite the approval of the Finance Act, 2021, which included the implementation of sales tax on the retail sale of sugar from July 1, 2021, the federal cabinet, in a recent meeting, decided to defer the enforcement of the law until the end of November 2021. The primary objective behind this delay was to curb the surge in sugar prices within the country, providing some respite to consumers and addressing concerns about affordability.
The FBR, aligning with the decision of the federal cabinet, promptly issued the SRO to formalize the deferment. This move showcases the government’s commitment to striking a balance between revenue collection objectives and ensuring that essential commodities remain affordable for the general public.
It is worth noting that sugar is a vital ingredient in the daily lives of Pakistanis, and any fluctuation in its prices can have a direct impact on households and businesses. The deferment of the sales tax on sugar retail sale until December 2021 is expected to alleviate some of the economic pressures associated with the commodity, providing stakeholders with additional time to adapt to the new tax regime.
Stakeholders, including retailers, consumers, and those involved in the sugar industry, are encouraged to stay informed about updates related to this deferment and any subsequent changes in the taxation structure. The FBR remains committed to addressing economic challenges and fostering an environment that balances revenue generation with the welfare of the citizens.
