Sales Tax Act, 1990

Proposed Amendments

Section 2(5AB) – Amendment

The bill seeks to amend one of the conditions to redefine classification of the cottage industry, before the amendment the condition of revenue during last twelve months was set at ten million rupees however it has now been reduced to eight million.

Section 2(43A) – Insertion

The bill seeks to broaden the scope of definition of Tier-I retailer to now include retailer whose deductible advance tax under section 236G or 236H exceeds a threshold as may be notified by the board.

Section 3(2)a – Amendment

The bill seeks to empower the Federal Board of Revenue to include or exclude any items under third schedule, previously the power was vested with the Federal Government.

Section 23(1)b – Insertion

The bill seeks to allow generation of invoice without National Identity Card Number for sales made to unregistered person by way of credit cards, debit cards or any other digital modes.

Section 23(1)g – Deletion

The bill seeks to withdraw the relief granted to seller if CNIC of the buyer was incorrectly provided in invoice. Hence, the liability of tax or penalty in case of wrong CNIC shall be borne by seller.

Section 30CA– Insertion

The bill seeks to establish an authority for monitoring and analysis of digital invoicing namely Directorate General of Digital Invoicing and Analysis.

Section 33 – Amendments

Offense 23– Amendment

The bill seeks to expand the scope of forfeited goods to include specified goods, previously only sale of counterfeit cigarette, cigarette stocks and cigarette packs were liable to penalty. Further, such goods are now not liable to be destructed by authority as earlier.

Offense 24- Amendment

The bill seeks to enhance the consequences for those taxpayer who are integrated with board and who avoid tracking, monitoring, reporting or recording of transactions. Now, business premises of such taxpayer may be sealed subject to certain conditions.

Offense 25A- Amendment

The bill seeks to enhance the punishment for non-integration of business with board, previously the business premises could be sealed after the default continues for the fourth time, however, now business premises could be sealed at any time regardless of the number of defaults.

3rd Schedule – Omission

The bill seeks to omit sugar from the third schedule.

Fifth Schedule

–Omissions

The bill seeks to levy standard sales tax rate on supplies to duty free shops previously the same was a zero rated supply in fifth schedule.

The bill seeks to charge standard sales tax rate on Supply of locally manufactured plant and machinery to export processing zone previously the same was zero rated supply in fifth schedule.

The bill seeks to exclude the export of exempt goods by manufacturer from zero rating and charge the same with standard sales tax rate.

The bill seeks to charge standard sales tax rate on the spare part and equipment supplied to ships which are above 15 tonnage and not designed or adapted for recreation, supply of equipment and machinery for salvage or towage service, for handling ships in ports.

The bill seeks to exclude food for infant and bicycles from zero rated supplies hence same will be charged standard sales tax.

–Insertion

The bill seeks to include medicine and petroleum crude oil to zero rated supplies.

Sixth Schedule– Amendments

The bill seeks to demolish exemption of sales tax from various goods and add same to standard rate of sales tax.

Table 1– Amendments

The bill seeks to charge standard rate of sales tax to import of various items including following;

· basic necessities like live animals, poultry, meat, fish, eggs, live plants, sugar cane etc.

· imports for natural disasters,

· imported samples, goods imported by government hospitals, goods imported by agencies of united nations etc.

The bill seeks to amend entry 13 to include vegetables only imported from Afghanistan to exempt supplies.

The bill seeks to amend entry 15 to include fruits only imported from Afghanistan exempt supplies excluding apples.

The bill seeks to exclude cereals and products of milling industry from exempt supplies.

The bill seeks to include rice, wheat and wheat and meslin flour to exempt goods.

The bill seeks to charge standard rate of sales tax to brochures and leaflets.

Table 2 – Amendments

The bill seeks to charge standard rate of sales tax to local supply of cotton seed exclusively meant for sowing, supply of locally produce crude oil, raw material and intermediary goods for in-house consumption, food prepared on flight for on board consumption, sprinkler equipment, drip equipment, spray pump and nozzles, raw cotton, single cylinder agricultural diesel engine, match boxes, whey and sausages and similar products etc.

The bill seeks to charge standard sales tax on bread prepared in bakeries, restaurants, food chains and sweet shops.

The bill seeks to exempt local supplies of live animals, poultry, meat, fish, eggs, live plants, sugar cane, newspaper and locally manufactured laptop, computer and notebooks.

Table 3– Amendments

The bill seeks to exclude from exemption the import of machine for balancing and modernization of power generation plants, machinery and equipment imported by hospitals, raw material imported by auto disabled syringes, machinery and equipment for mine construction or extraction phase, coal mining and machinery equipment, various machinery and equipment imported by technical training and research institutes, various items used in various renewable energy generation projects, import of POS machines.

Eight Schedule – Amendments

The bill seeks to withdraw reduced rate from various supplies including oilseeds meant for sowing, plant and machinery for poultry sector, various food items, re importation of goods exported out of Pakistan, various agriculture items, various items of poultry, silver in unworked condition, gold, jewelry, prepared food items sold by restaurants, bakeries, caterers and sweetmeat shops, items which were subject to lower sales tax due to integration of sales system with board, food products sold in retain packing, import of electric vehicles in CBU condition and business to business transactions etc.

The bill seeks to enhance rate of sales tax from 10 to 12% on supplies made by retailers integrated with board for supply of finished fabrics and leather etc.

The bill seeks to restrict reduce rate on locally manufactured vehicles having 850CC capacity only previously up to 1000CC capacity enjoyed the reduced rate.

The bill seeks to impose rate of 12.5% to import and local supply of hybrid vehicles, previously it was 8.5% for up to 1800CC and 12.5 for above 1800CC.

The bill seeks to include import of laptops, computer and notebook in reduce rate of 5%.

The bill seeks to omit table 2 of eight schedule which included reduce rate for machinery and equipment for grain handling, machinery and equipment meant for coal exploration, milk processing equipment, capital goods for transmission lines etc.

Ninth schedule– Amendments

The bill seeks to impose standard rate of tax on mobile phones imported having value more than 200 USD.