ISLAMABAD: Under the Tax Laws (Fourth) Amendment Bill, 2021, the Federal Board of Revenue (FBR) proposes to levy Rs.350 billion sales tax on a wide range of items, including a 17 percent sales tax on the import of LPG, mobile phones, computers, plant, machinery/equipment, and a lower rate of sales tax on the import of raw materials used in the manufacturing of medicines.
This implication will have an inflationary effect, which will be promptly passed on to consumers in the form of a 17 percent increase in item prices. The 17 percent sales tax is proposed to be imposed on the import of plant, machinery, and equipment, books, chemicals, solvent oil, household items under the baggage scheme, animals, seeds, poultry, eggs, meat, vegetables/fruit, pulses, and other items in the draught of the Tax Laws (Fourth) Amendment Bill 2021. Except for export and capital machinery goods, the FBR will delete all sales tax zero-rated goods and convert them to the ordinary 17 percent sales tax rate.
The FBR has also proposed a 17 percent sales tax on items that use renewable energy sources exclusively, such as solar and wind, such as solar PV panels; LVD induction lamps; SMD, LEDs, with or without ballast, with fittings and fixtures; wind turbines, including alternators and mast; solar torches and lanterns, and related instruments.
Third Amendment Ordinance, 2021: Senate Rejects Most Provisions
According to the draft Tax Laws (Fourth), Amendment Bill, 2021, the 17 percent sales tax will be applied to LPG; recyclable scrap; silver in unworked condition; gold in unworked condition; articles of jewelry and parts of jewelry made of precious metal or covered with precious metal; incinerators for disposing of waste; motorized sweepers for snow clearing; plant and machinery not manufactured locally or having compatible local substitutes; Poultry feed, cattle feed; goods reimported from foreign countries that had been temporarily exported from Pakistan; biodiesel plant, machinery, and equipment; used clothing or footwear; agricultural tractors; post-harvest handling and processing equipment and miscellaneous machinery and some other items specified in the Eighth Schedule of the Sales Tax Act, 1990.
Imports of plant, machinery, and production line equipment used in the manufacture of mobile phones by local manufacturers; laptop computers, notebooks, whether or not incorporating multimedia kit and personal computers; sunflower and canola hybrid seeds intended for sowing; and combined harvesters up to five years old would be subject to a standard rate of 17 percent sales tax.
Imports of live animals and live poultry, the meat of bovine animals, sheep and goat, fish and crustaceans, eggs including eggs for hatching, edible vegetables including roots and tubers, pulses and edible fruits, red chilies excluding those sold in retail packaging bearing brand names and trademarks, would be subject to sales tax.The following products are excluded from the scope: ginger excluding those sold in retail packaging bearing brand names and trademarks, turmeric excluding those sold in retail packaging bearing brand names and trademarks, cereals and products of the milling industry, seeds, fruit, and spores ready for sowing, Cinchona bark, and sugar cane.
Journals, periodicals, and books, currency notes, banknotes, shares, stocks, and bonds will be subject to sales tax; goods (including dry fruits imported from Afghanistan) temporarily imported into Pakistan, intended for subsequent exportation will be subject to a zero-rate customs duty; personal clothing and luggage imported by overseas Pakistanis and tourists will be exempt from Custom duties.; The Board may specify conditions and restrictions regarding the purchase of goods and services by non-resident entrepreneurs and in trade fairs and exhibitions; fresh, frozen, or preserved poultry meats; cottonseed; infant preparations put up for retail sale; colors in sets (poster colors); writing and drawing inks; erasers; exercise books; and pencil sharpeners; household sewing machines; other drawings, marking out, and calculating instruments (geometry box); pens, ballpoint pens, markers, and porous-tipped pens; and pencils, including color pencils.
Sales Tax Exemptions for Electric Vehicles, Kits
Fish feed, fans for dairy farms, bovine semen, preparations for creating an animal feed, promotional and advertising material, and oil cake and other solid leftovers, whether crushed or in the shape of pellets, are all planned to be subject to the sales tax.
The government would also levy a 17 percent sales tax on local supplies of raw materials and intermediary goods made or produced, as well as services given or rendered, by a registered person and consumed in-house for the manufacture of sales-tax-exempt goods.
Moreover, 17 percent sales tax has been suggested on the local supply of fixed assets; single cylinder agriculture diesel engines (compression-ignition internal combustion piston engines); and single cylinder agriculture diesel engines (compression-ignition internal combustion piston engines). Sprinkler systems; Drip apparatus; Spray pumps and nozzles, as well as matchboxes, may be exposed to chemicals.
There has been a proposal to impose sales taxes on a variety of goods and the raw materials used in the manufacture of preparations suitable for infants, put up for retail sale. These items include bicycles; coloring sets; writing and drawing inks; erasers; exercise books; pencil sharpeners; geometry boxes; pens, ballpoint pens, markers, and porous tipped pens; and pencils including coloring pencils.; The supply, repair, or maintenance of any ship that is not; (a) a ship of less than 15 LDT tonnage, nor (b) a ship designed or adapted for recreation or pleasure; the supply of spare parts and equipment for ships, and the supply of salvage and towage equipment and machinery, and the supply of equipment and machinery for other services provided for the handling of ships in ports.
