FBR's New Sales Tax: Bulk Goods under Brand Names and Trademarks Now Taxed
The Federal Board of Revenue (FBR)
has made a decision to impose sales tax on goods sold under specific brand
names and trademarks. This decision is part of the significant changes
introduced to the Sales Tax Act, 1990, through the Finance Act, 2023.
In a recent circular (Circular No. 02
of 2023-24 dated 21st July, 2023) issued on Friday, the
FBR clarified that before the Finance Act, 2023, sales tax applied to imports
and local supplies of certain edible goods that were sold in retail packaging
and carried brand names and trademarks. However, there was confusion regarding
whether these goods, when supplied in "bulk" packaging, qualified for
a sales tax exemption, despite still being associated with a brand name or
trademark.
To eliminate ambiguity and address
this issue, the FBR has amended the relevant entries in Table-1 and Table-2 of
the Sixth Schedule. The distinction between "retail" and
"bulk" packaging has been removed, making all supplies of the
specified goods under brand names or trademarks subject to sales tax.
The goods affected by this new tax
regulation include red chilies, ginger, turmeric, yogurt, butter, desi ghee,
cheese, processed cheese (excluding grated or powdered), products of meat or
meat offal, meat of bovine animals, sheep, goat, uncooked poultry meat, fish,
and crustaceans.
The FBR's objective in implementing
this change is to ensure a more transparent and consistent approach to taxing
goods sold under brand names and trademarks. These revised tax regulations will
have implications for businesses and consumers involved in the production and
distribution of the mentioned specified goods.
