Goods imports enjoy most sales tax exemptions.

Byline: Mubarak Zeb KhanUpdated

ISLAMABAD -- The sales tax exemptions on imports of goods make up Rs255.843 billion or 49.3 per cent of the total exemptions granted in the Fiscal Year 22, the Federal Board of ReveAnue's (FBR) internal report showed.

The total sales tax exemptions stand at Rs58.84bn. The estimates come from the FBR's first-ever comprehensive report titled: Tax Expenditure 22.

Under the Sales Tax Act, concessions are granted in three ways: zero-rating, exemptions, and reduced rates.

Exemptions on import of goods are subject to specific conditions. However, the report does not mention the actual number of products that were exempted but instead clubs them together in 74 serials.

Of the exemption costs on imports, the bulk of Rs65.279bn was given to pharmaceutical products; followed by Rs54.4bn to cotton and cotton waste; Rs43.265bn to vegetable oil, fats and waxes and Rs4.436bn to milk cream and butter dairy products.

At the import stage, sales tax exemptions amounting to Rs28.65bn were given on poultry and animal feed and meals of sunflower; Rs6.396bn on miscellaneous chemicals; Rs8.255bn on cereals and grains other than rice; Rs7.743bn on oilseeds, miscellaneous grains and medicinal plants; Rs5.638bn on edible vegetables; Rs5.22bn on miscellaneous electrical machinery and equipment; Rs4.946bn on computer and office equipment; Rs4.847bn on electrical energy; Rs3.83bn on meat and edible meat offal; Rs3.663bn on printed books, newspapers, pictures and manuscripts; Rs3.6bn on medical, dental instruments and supplies and Rs3.39bn on live animals.

The exemption cost of products placed in serials range between Rsbn to Rs3bn. These products are mostly related to industrial inputs. The exemptions cost on products placed in 23 serials is in the range of Rs million to Rsbn. The sales tax exemption costs on import of goods placed in 5 serials is less than Rsm.

The second highest tax exemption cost is of the reduced rate of 2pc charged on products placed under the 8th Schedule of the Sales Tax Act. The total exemption costs under the schedule stand at Rs74.8bn or 4.26pc. This concession rate is only available to fertilisers - all types.

The sales tax concessions costs stand at Rs54.87bn or .57pc on local supply of goods placed in 43 serials under the act. The bulk of the concession amount of Rs24.963bn is available on local supply of cotton and...

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