MULTAN, February 26: The Federal Tax Ombudsman (FTO) has strongly recommended that the Federal Board of Revenue (FBR) consider granting sales tax exemption on local sales of bun and rusk in the upcoming Budget 2025, recognizing them as essential food items for the lower-income population.
In a significant ruling, the FTO noted the FBR’s failure to issue a clear directive on the taxability of basic necessity items such as bread, bun, rusk, naan, and roti, despite multiple requests from the complainant. The order deemed this inaction as maladministration under Section 2(3) (ii) of the FTC Ordinance and urged immediate corrective measures.
The FTO directed the Member Tax Policy FBR, to respond to the complainant’s query regarding the correct tax treatment and reporting mechanism for these products in sales tax returns, ensuring alignment with legal provisions. Additionally, it stressed the need for the FBR to examine and incorporate a tax exemption for bun and rusk in the Budget 2025, acknowledging their significance in daily consumption patterns.
The complainant specifically highlighted the overlapping tax classifications between Table-2 of the Sixth Schedule and Entry 87 of Table-I of the Eighth Schedule of the Sales Tax Act. The ambiguity in reporting various bread products in sales tax filings has caused compliance challenges, necessitating a clear policy directive.
Furthermore, as per the World Bank’s Macro Poverty Outlook for Pakistan, real wage stagnation and limited employment growth will keep poverty rates close to 40% until FY 2026. Given the widespread economic hardships, particularly affecting daily wage earners, it is common to see workers starting their day with bun or rusk and tea a basic yet essential meal for survival.
Recognizing the economic realities, the FTO emphasized the urgent need for FBR to reconsider the taxability of bun and rusk, aligning fiscal policies with social welfare priorities. Granting a sales tax exemption on these staple items in Budget 2025would provide much-needed relief to the lower-income population, ensuring affordable access to essential food products.
