Provisions of Finance Act 2016 coming into force from 25th June 2016
Finance Act, 2016 has provided that certain provisions thereof shall come into force from the day next following the assent of the President of the Islamic Republic of Pakistan to the Act. The President has been pleased to grant assent to the Finance Act, 2016 on 24-06-2016. The following provisions of the sales Tax Act, 1990 and the Federal Excise Act,2005 will, therefore, become applicable from 25-06-2016:-
Sales Tax on Sugar – Sugar was exempt from sales tax whereas it was chargeable to FED @ 8%. Through the Finance Act, 2016, exemption of sales tax from sugar has been withdrawn. Moreover, FED on sugar has also been abolished. Now sugar is chargeable to sales tax at the reduced rate of 8%.
Pesticides and their active ingredients – pesticides and their active ingredients were chargeable to sales tax @ 7%. Through the Finance Act, 2016 pesticides and their active ingredients have been granted exemption from sales tax.
Agriculture Tractors - agriculture tractors were chargeable to sales tax @ 10%. Through the Finance Act, 2016 the rate of sales tax on agriculture tractors has been reduced to 5%.
Urea Fertilizer – urea fertilizer was chargeable to sales tax at the standard rate of 17%. Through Finance Act, 2016 urea fertilizer will now be chargeable to sales tax @ 5%.
Mobile Phones – The rate of sales tax on Category “B” and Category “C” mobile phones has been increased from Rs. 500 and Rs. 1000 to Rs. 1000 and Rs. 1500 respectively.
Aerated Waters & Beverages - aerated waters & beverages were charged to FED @ 10.5%. Through Finance Act, 2016 the rate of FED on aerated waters & beverages has been increased to 11.5%.
Cement – Cement was chargeable to FED @ 5%. Through Finance Act, 2016 cement is now chargeable to FED @ Rs. 1 per kg.
All the concerned taxpayers are therefore requested to charge and pay sales tax at the new rates given above with effect from 25th June 2016.
Dr Muhammad Iqbal
Official spokesperson FBR
Jun 24, 2016