FBR Releases List of Commodities Eligible for Zero Rating of Sales Tax for FY-2025
The Federal Board of Revenue (FBR) has released a list of commodities that would be zero-rated for sales tax in the fiscal year 2025. The move is in pursuance of Section 4 of the Sales Tax Act, 1990, which provides a list of commodities that are eligible for this treatment.
Zero-Rating of Sales Tax: Important Provisions
According to the FBR, the following goods will be taxed at a zero percent rate:
Exported Goods and Fifth Schedule Items
Goods that are exported from Pakistan or those listed in the Fifth Schedule of the Sales Tax Act will qualify for zero-rating,
Supplies for Conveyances
Goods supplied for consumption on conveyances traveling outside Pakistan, as outlined in the Customs Act of 1969, will also be eligible for zero-rating.
Goods Specified by Federal Government
The federal government shall have the authority to issue public notices to zero-rate further goods. It would normally be done in emergencies when matters are related to national security, natural calamities or food security crises. Such other situations may be those brought by international agreements.
Terms and Conditions
FBR also made some terms and conditions which provide for the applicability of zero-rating,
Re-imported Commodities
Commodities, exported from Pakistan, if being re-imported within the country would not benefit from zero-rating.
Undocumented Commodities
Goods that were intended for export but were not exported will not qualify for zero-rating.
Exports to Certain Countries
Exports to certain countries, which the federal government determines, are not allowed to be zero-rated.
The government may also restrict the tax credit allowed on zero-rated goods subject to specific conditions.
Focus of FBR on Compliance
The FBR is concerned with ensuring that the rules on zero-rating are followed in the right way. The FBR would thereby avoid the misuse of this system by clearly defining which goods qualify for the benefit. The taxpayers are thus advised to stay informed and follow the guidelines so that they are not penalized.
These measures reflect the effort of the FBR to balance the tax relief provided and the national economic interests.
