Government to bring online markets under sales tax ambit, withdraw zero-rating for petroleum sector

KARACHI: The sale of goods through online market place is proposed to be brought into the sales tax net by deeming the online market place as supplier in respect of third party sales through their platform.

For specified goods, it is proposed that it may be made mandatory for manufacturers of such goods to obtain brand license for each separate brand or SKU.

Zero-rating is proposed to be withdrawn from petroleum crude oil, parts/components of zero-rated plant and machinery, import of plant and machinery by petroleum and gas sector and supply, repair and maintenance of ships.

Sixth Schedule and Eighth Schedule of Sales Tax Act are proposed to be streamlined and reduced rates other than relating to basic food items, health and education are proposed to be brought into standard regime.

The minimum annual threshold of turnover from all supplies for cottage industry is proposed to be increased from Rs3.0 million to Rs10 million.

To encourage IT industry in the country, import of plant, machinery and raw material by Special Technology Zone is proposed to be exempted from sales tax.

Rising prices of locally manufactured small cars is a major concern for low earning families. Accordingly it is proposed that small cars upto engine capacity of 850cc may be exempted from value added tax besides reducing sales tax rate from 17 percent to 12.5 percent.

The rate of sales tax on potassium chlorate is proposed to be increased from Rs. 80 per kg to Rs. 90 per kg in addition to 17% standard rate.

To facilitate farmers and encourage storage of grain, tax exemption on locally manufactured silos is proposed to be granted till 30.06.2026.

For promoting ease of doing business, the concept of Common Identifier Number is proposed to be introduced.

For establishment of Border Sustenance Markets, exemption from sales tax is proposed to be granted on food related and other consumable goods.

In order to introduce umbrella Export Facilitation Scheme by Customs Wing, exemption on import and zero-rating on local supplies in respect of raw materials, components, parts and plant and machinery to authorized exporters is proposed.

In order to reap reasonable revenue from this sector, federal excise on mobile phone calls exceeding three minutes at the rate of Re1 per call, SMS message at Re0.1 per SMS, and internet data usage at Rs5 per GB is being proposed. This will result into mild taxation of a broad spectrum of population.

However, the rate of federal excise duty on telecommunication is proposed to be reduced from 17 percent to 16 percent.

Government has also proposed to tax premium on car prices, if the vehicle is sold before registration.

The government has also proposed reduction in tax rate on capital gain tax on disposal of securities from 15 percent to 12.5 percent while reduction in tax liability by 25 percent for women entrepreneurs is also proposed.

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