Federal Board of Revenue (FBR) Member, Inland Revenue, (Operations) Dr Hamid Ateeq Sarwar said Thursday that International Monetary Fund (IMF) has linked abolition of four percent “further sales tax” on supplies to un-registered persons with sales tax registration of 50,000 persons.
Explaining the rationale of retaining four percent additional sales tax on supplies to un-registered persons, FBR Member informed Senate Standing Committee on Finance on Thursday that the FBR had proposed abolition of four percent “further sales tax” in budget (2025-26). When we took the proposal to the fund for approval, the IMF has asked the FBR to increase the number of sales taxpayers before abolition of the said tax.
In 2023, the FBR had increased the rate of “further sales tax” from three to four percent in the amended Finance Bill 2023.
FBR extends deadline for electronic integration of sales tax system by one month
Presently, the rate of further tax is four percent on the supplies made to the un-registered persons.
The rate of “further sales tax” was increased by one percent to discourage supplies made to the unregistered persons. If a person intended to remain out of the sales tax net, he is required to pay higher rate of further tax at the rate of four percent.
Under the law, the “further tax” is charged on supplies of taxable goods made by a registered person to a person who has not obtained a sales tax registration number or has obtained a registration number but is not an active taxpayer.
The said rate of sales tax under sub-section (1A) of Section 3 of the Sales Tax Act was enhanced to four per cent through the Finance Act, 2023.
The FBR Member said that the level of tax compliance in Pakistan is evident from the data that out of 200,000 registered sales taxpayers, only 60,000 are paying sales tax. Out of this, only 30,000 manufacturers are paying sales tax. “We have 3 lakh 80,000 industrial consumers and over 5 million commercial connections.”
About the cyber security arrangements of the FBR, he added that the government has averted 1,684 Indian cyber attacks including those on FBR. There was no data leakage of taxpayers as a result of these attacks, he added.
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