ISLAMABAD: The Federal Board of Revenue (FBR) has defined “digital means” in the Income Tax Ordinance, 2001 for the corporate sector for switching over to digital mode of payment and abolished 17 percent sales tax on import and supply of red chillies, iodised salt, breads, imported bicycles, and locally-manufactured preparations (milk/cereals) for infant (up to Rs500 per 200 grams).
Through amendments in the Finance (Supplementary) Bill, 2021, the government has reduced the Federal Excise Duty (FED) slabs on locally-manufactured or assembled motor cars and abolished 17 percent sales tax on breads, vermicillies, naans, chapattis, sheer mal, bun and rusk excluding those sold in bakeries, restaurants, food chains and sweet shops falling in the category of Tier-I retailers.
Under the amendment in the Finance Bill 2021, the FBR will charge 12.5 percent sales tax import of electric vehicle in CBU conditions. The amendments in the Finance (Supplementary) Bill, 2021 revealed that the locally-manufactured hybrid electric vehicles upto 1,800cc would be subjected to reduce rate of 8.5 percent sales tax. However, locally-manufactured hybrid electric vehicles from 1,801cc to 2,500cc would now be charged 12.75 percent sales tax.
Earlier, the Finance (Supplementary) Bill, 2021 has proposed 12.5 percent sales tax on import and local supply of hybrid electric vehicles upto 1,800cc. Through amendments in the Finance (Supplementary) Bill, 2021, the government has also revised the rates of the FED on the locally-manufactured or assembled motor cars, SUVs, and other motor vehicles.
Under the revised slabs, the FED at the rate of 2.5 percent would be applicable (cylinder capacity upto 1300cc) on the locally-manufactured or assembled motor cars, SUVs, and other motor vehicles, excluding auto rickshaws principally designed for the transport of persons (other than those of headings 87.02), and till the June 30, 2026 electric vehicles (4 wheelers) including station wagons and racing cars.
Under the said categories of vehicles, five percent FED would be applicable on such vehicles of cylinder capacity from 1301cc to 2000cc and 10 percent FED on vehicles of cylinder capacity of 2001cc and above.
The sales tax exemption would not be withdrawn on the import and local supply of red chillies excluding those sold in retail packing bearing brand names and trademarks and import and supply of iodised salt bearing brand names and trademarks whether or not sold in retail packing.
The sales tax exemption/concessionary rates have been retained on the pesticides, bakery items, fertilisers, laptops, and computers. The FBR will charge 17 percent sales tax on the import of preparations for infant milk.
The amendments in the Finance (Supplementary) Bill, 2021, further revealed that the income tax exemption under this clause shall be available to the Independent Power Producers (IPPs), who enter into agreement or to whom letter of intent is issued by the federal or the provincial government for setting up an electric power generation project in Pakistan on or before June 30, 2021 and who obtains the letter of support on or before June 30, 2023.
The FBR has also defined the “digital means” under the amended bill 2021. The “digital means” means digital payments and financial services including but not limited to online portals or platforms for digital payments or receipts; online interbank fund transfer services; online bill or invoice presentment and payment services; over the counter digital payment services or facilities; card payments using Point of Sale terminals, QR codes, mobile devices, ATMs, Kiosk or any other digital payments enabled devices; or any other digital or online payment modes.