The government would announce relief measures in budget (2016-17), including tax relief on the import of vitamins/minerals and micronutrients, increase threshold for cottage industry for exemption from sales tax from Rs 5 million to Rs 10 million and further tax exemption on the imported second hand and worn clothing from next fiscal year.
Sources said that the sales tax is levied @ 5 percent on the import stage, 3 percent as value addition and 2 percent as further tax under section 3(1A). However, the cumulative impact of sales tax is 10 percent on the second hand and worn clothing, whereas local branded clothing is subject to 5 percent sales tax. The concerned associations are seeking treatment at par with local brands. It has been proposed that exclusion from further tax may be provided to the second hand and worn clothing. To provide relief to the general public, the Federal Board of Revenue (FBR) is planning to exempt sales tax on the import of vitamins premixes, minerals and micronutrients in budget (2016-17.)
Sources said that the exemption has been proposed on the request of Ministry of Health which sought exemption from sales tax on the import of vitamins premixes, minerals and micronutrients (food grade) to combat growth stunting. The government would also enhance the turnover threshold for cottage industry for exemption from sales tax. The rationale behind the proposal is that the low turnover threshold of Rs 5 million increases the number of registered persons who make minimal contribution whereas the FBR's enforcement measures are increased, but return filing have not been properly enforced. It has been proposed to increase threshold of cottage industry from Rs 5 million to Rs 10 million in budget 2016-17.