Wednesday, February 21, 2024

Govt to reduce edible oil taxes

The federal government announced on Saturday that it would provide tax relief on the prices of edible oils and ghee, as well as steel items, while simultaneously tightening its hold on industrial and commercial consumers who do not file tax returns.

According to the Federal Board of Revenue (FBR), customers who are not registered in the Active Taxpayer List (ATL) would be subject to an extra sales tax ranging from 5 percent to 17 percent on electricity and natural gas purchases.

Previously, the tax on non-compliant clients was set at a rate of 5 percent.

The government’s new taxation policies are intended to increase the revenue base while also cracking down on individuals who do not pay their fair share of taxes.

In addition, the government has waived a 1 percent additional tax on the steel industry as well as the supply of edible oil.

The Federal Reserve Board of Governors published SRO 1223(I)/2021 on Friday, amending SRO 648(I)/2013.

According to the announcement, additional sales tax would not be applicable to supplies made by the steel industry or to supplies made by the edible oil industry, among other things.

According to SRO 1222(I)/2021, the federal government assessed an additional rate of sales tax on the total amount of electricity and gas supplied to persons who had industrial or commercial connections but who had not obtained a sales tax registration number or who were not on the ATL, in addition to the tax payable on the electricity and gas supplied to persons who were not on the ATL or who had not obtained a sales tax registration number but who were on the ATL.

Similar to residential consumers, commercial consumers will be subject to an additional tax of 5 percent on electricity and gas bills up to Rs10,000; 7 percent on bills between Rs10,000 and Rs20,000; 10 percent on bills between Rs20,000 and Rs30,000; and 12 percent on bills between Rs30,000 and Rs40,000.

The FBR believes that the change will encourage industrial and commercial consumers to register for sales tax and to raise their numbers on the FBR’s ATL, which will result in a rise in tax collection.

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