The government is likely to charge sales tax on supply of mineral water, taking into account the printed retail price, in the upcoming budget (2016-17). Sources told Business Recorder here on Tuesday that the budget proposal is under consideration to collect sales tax on bottled water by bringing this item into the Third Schedule of the Sales Tax Act 1990. The Federal Board of Revenue (FBR) is considering the proposal for the upcoming budget (2016-17). If bottled water is included in the Third Schedule to the Sales Tax Act, 1990, it would restrict over 110 licensed bottled water companies to pay sales tax on the basis of printed retail price.
In the last budget, a penalty of Rs 50,000 was proposed for business and trade not declaring/printing retail price on their products. The standard rate of sales tax on supply value of the product is chargeable in case of "mineral water". The government intends to make a new entry "Mineral Water" in the third schedule of the Sales Tax Act., 1990 which deals with items chargeable to sales tax on its retail price. It is important to note that by virtue of the amendment though the rate of sales tax will remain same and no rate increment will apply, but still due to application of higher price chargeable to end consumer of the product, the government is likely to collect higher sales tax. The persons dealing in items falling under Third Schedule are also liable to mention retail price in their article, bottle or product, sources added.