PESHAWAR: The federal government has decided to impose 18 percent sales tax on goods manufactured in the erstwhile tribal areas (FATA/PATA) as part of a major tax reform in the budget for the upcoming fiscal year 2025-26.
According to sources, this move is part of a series of steps to end sales tax incentives, which is aimed at increasing revenues and expanding the tax net. According to a report, this move is likely to generate more than Rs45 billion in revenue for the government in the upcoming fiscal year. Sources further said that if the relaxation given in income tax for these areas is also withdrawn, then the revenue could increase significantly.The Federal Board of Revenue (FBR) has started drafting relevant legal amendments to implement this decision. These amendments are being made in light of court orders and existing legal provisions.
It may be recalled that under the Finance Act 2024, the erstwhile FATA and PATA were exempted from sales tax on imports, local supply of goods and supply of electricity till June 30, 2025.
However, under the new policy, to maintain sales tax exemption on imports, it will be mandatory to submit a pay order in place of a post-dated cheque. In addition, a pay order will be released within six months on the basis of a certificate of use or installation issued by the concerned commissioner. According to government sources, this decision has been taken to widen the tax net and implement the policy of fiscal self-reliance.
Read also: Supreme Court of Pakistan restores Sales Tax Amendment Act in erstwhile FATA
