ISLAMABAD: The draft of the Tax Laws (4th Amendment) Ordinance, 2021 has been vetted by the Law Division to withdraw sales tax exemptions, zero-rating, and reduced sales tax rates of around Rs 395 billion.

Sources told Business Recorder that the Ordinance is expected to be presented before the next cabinet meeting for approval. The process of the vetting of the draft law has been completed. Following promulgation by the President, the Tax Laws (4th Amendment) Ordinance, 2021 may be presented before the Parliament.

Through the Ordinance, the Sixth Schedule (Exemption Schedule) of the Sales Tax Act 1990 would be completely revamped. Except essential food and health items, the government will withdraw sales tax exemptions from the Sixth Schedule.

Rs330bn sales tax exemptions: Presidential Ordinance on the cards

The presidential ordinance would restrict the sales tax exemptions to only a few items.

Sources said that the government may impose a 17 percent sales tax on cellular mobile phones in CKD/CBU form under the Ninth Schedule of the Sales Tax Act 1990. The government will also withdraw all kinds of sales tax zero-rating except exports under the said Ordinance, they added.

Copyright Business Recorder, 2021