Tax Laws (Second Amendment) Ordinance 2019 has withdrawn sales tax exemption on local supplies of edible oils and vegetable ghee, including cooking oil made by importers, distributors, wholesalers or retailers.

Through the Tax Laws (Second Amendment) Ordinance 2019, the government has amended the Sixth Schedule (Exemption Schedule) of the Sales Tax Act.

Sources said the sales tax on supplies of edible oil, cooking oil and ghee was exempted under serial number 24 of Table-I of the Sixth Schedule of the Sales Tax Act for the same reason that the same was subject to federal excise duty (FED) in sales tax mode. However, FED is payable only by manufacturers, whereas supplies of distributors, wholesalers and retailers have been exempted from the purview of the said sales tax exemption. The supplies of importers have not been specifically excluded from such exemption. Through the Finance Act, 2019, the special procedure available to the ghee and cooking oil sector whereby tax at Re 1 per kg was payable in addition to 16 percent FED in lieu of local value addition was withdrawn and now FED is payable at 17 percent at the import and manufacturing stage and sales tax is to be paid at 17 percent at subsequent stages of supply chain. Accordingly, it was proposed that the local supplies of importers may also be specifically excluded from the purview of exemption available at serial number 24 of Table-I of the Sixth Schedule of the Sales Tax Act 1990.

Previously, sales tax exemption was available on edible oils and vegetable ghee, including cooking oil, on which Federal Excise Duty is charged, levied and collected by a registered manufacturer or importer as if it were a tax payable under section 3 of the Sales Tax Act. Exemption of this entry shall not be available to distributors, wholesalers or retailers.

After amendment in the Sixth Schedule of the Sales Tax Act, the sales tax exemption shall not be available on local supplies made by importers, distributors, wholesalers or retailers.

Tax Laws (Second Amendment) Ordinance 2019 has withdrawn sales tax exemption on frozen prepared or preserved sausages and similar products of poultry meat or meat offal sold in retail packing under brand name.

Under the amended Sixth Schedule (Exemption Schedule), sales tax exemption has also been withdrawn on meat and similar products of prepared frozen or preserved meat or meat offal of all types including poultry, meat and fish sold in retail packing under brand name.