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Sales tax reduced on textile and leather products

Sales tax reduced on textile and leather products

ISLAMABAD: The rate of sales tax has been reduced to 5 per cent on taxable supplies of finished articles made of leather, artificial leather and textiles and textile made-ups. Local supplies of these goods to un-registered persons including government departments having Free Tax Numbers (FTNs) are also liable to one percent extra/further tax.

Federal Board of Revenue has conveyed to the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to follow the Board’s new sales tax clarification in the field formations. It is learnt that FBR has issued a clarification to the Chief Commissioners of the LTUs and RTOs on the rate of sales tax on textile and leather finished products for compliance.

The new FBR clarification has been made applicable in the field formations. According to the FBR”s instructions to the field formations, the taxable supplies of finished articles of leather, artificial leather and textiles and textile made-ups falling under Table-II of SRO 1125(I)/2011 dated 31.12.2011 (as amended by SRO 628 (I)/2013 dated 26.7.2013) are chargeable to sales tax @ 5 per cent with effect from 26th July, 2013. Supplies of the said goods to unregistered persons (including government departments holding FTN) are also subject to further tax @ 1 per cent under section 3(1A) of the Sales Tax Act, 1990.