Withdrawal of SRO-based sales tax exemptions: FBR can generate Rs 15 billion more revenue

The Federal Board of Revenue (FBR) has informed the Ministry of Finance that the additional revenue of approximately Rs 15 billion could be generated if statutory regulatory order (SRO)-based sales tax exemptions are withdrawn on few major items like fertilisers, pesticides and pharmaceutical products. Sources told Business Recorder here on Friday that the FBR had worked out revenue implications of SRO-based exemptions available to some major sectors.
"The data of SRO-based exemptions available on few items has been communicated to the Finance Ministry for further consideration. The withdrawal of sales tax exemption on fertilisers could generate around Rs 5.7 billion, pesticides Rs 467 million and withdrawal of SRO-based sales tax exemption on certain pharmaceutical products could generate additional revenue of Rs 8.8 billion," they added.
The FBR has further worked out that the withdrawal of SRO-based sales tax zero-rating on selected items can generate an amount of over and above Rs 3.6 billion. If sales tax zero-rating on dairy products was withdrawn, it could generate an amount of Rs 2.5 billion. Similarly, if the FBR abolished sales tax zero-rating facility on stationary items, it would generate an amount of Rs 1.2 billion, they added.
"Thus the FBR can generate a total of Rs 18.6 billion from proposed withdrawal of sales tax exemptions and zero-ratings on selected items where approval of the Parliament is not required. The federal government can exercise powers under the Sales Tax Act to withdraw exemptions granted through notifications following approval of the Finance Ministry," they opined.