Sales Tax Rules, 2006: KTBA seeks inclusion of pharma sector under Rule 18A

KARACHI: The Karachi Tax Bar Association (KTBA) has formally requested the inclusion of the pharmaceutical sector under Rule 18A of the Sales Tax Rules, 2006.

In a letter addressed to the Member IR, Policy, the KTBA highlighted recent changes to the tax regulations and their implications for the pharma industry.

The request comes in light of the new provision added to Rule 18A via SRO 1130 of 2024, dated August 1, 2024. This amendment exempts certain registered persons from the second proviso to sub-rule (3) of Rule 18, which was introduced earlier through SRO 350 of 2024 on March 7, 2024.

Currently, the pharmaceutical sector operates under a fixed 1% sales tax regime, as stipulated in Serial No 81 and 82 of the Eighth Schedule of the Sales Tax Act, 1990.

This arrangement does not allow for input tax claims.

The KTBA argued that since pharma manufacturers pay sales tax for the entire supply chain, the requirement for vendors and suppliers to submit returns under Rule 18(3) was redundant in these cases.

KTBA therefore urged the FBR to add the pharma sector to the list of businesses covered by Rule 18A of the Sales Tax Rules, 2006. This move, if implemented, could streamline tax processes for the pharma industry and potentially reduce administrative burdens, it added.

Copyright Business Recorder, 2024