FBR shares updates on the Sales Tax Act and the Federal Excise Act

The Federal Board of Revenue (FBR) has issued updated versions of the Sales Tax Act, 1990 and the Federal Excise Act, 2023. The updates incorporate amendments made in the sales tax law through the Finance (Supplementary) Bill, 2023.

Sales Tax Increased to 18% by FBR

The updated Sales Tax Act allows the federal government to declare, by notification in the official gazette, the tax rates on goods specified in the Third Schedule, which may be higher than the current rates.

In accordance with this provision, the FBR has increased the rate of sales tax from 17% to 18%. This increase will be effective from February 23, 2023.

Import of Mobile Phones with Higher Value to be taxed at 25%

The updated Sales Tax Act also specifies that the import of mobile phones exceeding US$ 200 but not exceeding US$ 350 will be subject to a sales tax of 18%. Mobile phones exceeding the value of US$350 but not exceeding US$500 will also be subject to a sales tax of 18%. The government will subject mobile phones exceeding the value of US$500 to a sales tax of 25%.

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Excise Duty on Sugary Drinks Increased to 10% by FBR

The revised Federal Excise Act specifies that a 10% excise duty will be applicable on sugary fruit juices, syrups and squashes, waters whether or not containing added sugar or artificial sweeteners excluding mineral and aerated waters.

Read: Government of Punjab imposes fines on all property tax defaulters

Higher Excise Duty on Cigarettes with Higher Retail Price

Under the amended Federal Excise Act, locally-produced cigarettes if their on-pack printed retail price exceeds Rs9,000 per 1,000 cigarettes, the rate of FED would be Rs16,500 per 1,000 cigarettes.

Locally-produced cigarettes if their on-pack printed retail price does not exceed Rs9,000 per 1,000 cigarettes, the rate of duty would be Rs5,050 per 1,000 cigarettes.

The government expects these amendments to raise additional revenue. They are also likely to have an impact on consumer prices.

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