The government has decided to impose 10 percent sales tax on all kinds of dairy products (milk and its bi-products) sold in retail packing with the brand name in budget (2015-16). According to the sources, this 10 percent sales tax would be imposed on dairy products through Finance Bill (2015-16).
Dairy items likely to be subjected to 10 percent sales tax are milk including flavored milk, yogurt, cheese, butter, cream, Desi ghee, whey, milk with cream-concentrated and added with sugar or other sweetener, preparations for infant use put up for retail sale and fat filled milk sold in retail packing under brand name.
Five percent sales tax would have to be imposed on poultry feed and cattle feed including all their ingredients except soyabean meal of Pakistan Customs Tariff (PCT) heading 2304.0000 and oil-cake of cottonseed falling under PCT heading 2306.1000; incinerators for disposal of waste and management, motorized sweepers and snow ploughs; re-importation of foreign origin goods which were temporarily exported out of Pakistan subject to similar conditions as are envisaged for the purposes of applying zero-rate of customs duty under the Customs Act, 1969; reclaimed lead, if supplied to recognized manufacturer of lead batteries and refined lead manufacturers; waste paper; ginned cotton and plant, machinery, equipment and specific items used in production of bio-diesel.
The government has also decided to abolish exemption on certain products like poultry feed, cattle feed, incinerators, motorized sweepers, snow ploughs, reclaimed lead, waste paper, ginned cotton-enjoying exemption under the Sixth Schedule to the Sales Tax Act, 1990. Therefore, the items will be charged to sales tax at a reduced rate of 5 percent.
The government has also decided enhancement of sales tax rate for certain items of Eight Schedule of the Sales Tax Act, 1990 like soyabean meal, oil seeds meant for sowing, plant and machinery not manufactured locally and having no compatible local substitutes, etc. These items will be charged sales tax at the reduced rate of 10 percent.
The government has also decided that exemption of sales tax to raw hides and skins would be granted as under the existing provisions of law, the imported raw hides and skins are enjoying exemption. The exemption to independent refined lead manufacturers would be granted as the same facility is already being extended to the registered manufacturers of lead batteries, sources added.