Islamabad: Federal Board of Revenue (FBR) has increased sales tax rate on supply of food stuff by restaurants, bakeries, caterers and sweet meats shops to 17 percent. The FBR recently issued Circular No. 07 of 2022 to explain amendment introduced in the Sales Tax Act, 1990, through Finance (Supplementary) Act, 2022. Earlier, the tax body was receiving 7.5% tax on food, food stuff and sweetmeats supplied by restaurants, bakeries, caterers and sweetmeats shops.
“Through Finance (Supplementary) Act, 2022, serial No. 64 of Eighth Schedule of Sales Tax Act, 1990 has been omitted; now these products shall be chargeable to tax at 17 per cent under the VAT regime,” read the notification. The sources suggest that this increment of sale tax on the supply of food stuff is for the revival of the stalled bailout programme of the International Monetary Fund (IMF).
The marriage halls, hotels, motels and guest houses shall continue paying the 16% tax which was imposed previously. The recent update in the taxation charges sees no change regarding the mentioned sectors which continues to pay 16% sales tax on their services.
The New Year saw changes in many amendments which came as a surprise to many business holders. The sudden increase in sales tax on the supply of goods by restaurants, bakeries and sweetmeat shops was not taken pleasurably as almost 130 percent raise was implemented. Previously, the sales tax on the supply of food stuff was 7.5 percent which recently got updated and rose up to 17%. The news may not be good enough for the businessmen but it will help in generating great revenues. The increase in sales tax will see a drastic change in the revenue generated which is expected to go higher than the Rs.352 billion yearly. The sales tax on supply of foods stuff by restaurants, bakeries, caterers and sweetmeats shop was implemented from 16th January 2022.
