ISLAMABAD: The Federal Board of Revenue (FBR) has denied input tax adjustment facility, from July 1, 2022, to the manufacturers and importers of pharmaceutical raw materials after payment of one percent sales tax at the import stage.

According to the Finance Act, 2022, the manufacturing or imports of substances registered as drugs under the Drugs Act, 1976 would be subjected to only one percent sales tax. This is subject to the conditions that the sales tax charged and deposited by the manufacturer or importer shall be a final discharge of tax in the supply chain. No input tax shall be adjusted by the manufacturer or importer.

The one percent sales tax would also be applicable on the import of the active pharmaceutical ingredients, excluding excipients, for the manufacture of drugs registered under the Drugs Act, 1976 or raw materials for the basic manufacture of pharmaceutical active ingredients.

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This is subject to the conditions that the DRAP shall certify item-wise requirements of manufacturers of drugs and APIs and in case of import shall furnish all relevant information to Pakistan Customs Computerized System and no input tax shall be adjusted by the manufacturer or importer.

Copyright Business Recorder, 2022