ISLAMABAD: Finance Ministry is of the viewpoint that sales tax at a higher rate has direct co-relation with hike in prices of commodities.
This is why, in a bid to keep the prices of essential commodities in check, the finance ministry has granted total exemption from sales tax to essential commodities in use by common man and wherever possible sales tax at reduced rate has been imposed on essential commodities.
“This is evident from the fact that meat, poultry, fish, eggs, vegetables, pulses, fruits, spices, produce of milling industry like flour, rice, etc. are totally exempt from sales tax with the exception of those sold in retail packing and under a brand name” a well placed source at Federal Board of Revenue (FBR) told Customs Today.
Similarly, the source said that dairy products were exempted from sales tax with the exception where the same were sold in retail packing and under a brand name which too were subjected to reduced sales tax rate of 10%. Medicines and interventional equipment and apparatus for treatment of almost all the diseases are totally exempt from sales tax.
“Sugar, a major commodity of common man’s use is subject to reduced sales tax rate of 8%. Likewise, finished articles of textile and leather are also subject to reduced sales tax rate of 5% given consideration to common man’s needs, exception being imported finished articles of leather and textile” the source added.
The source said that Finance Ministry also kept POL products in check and impact of increase in international Prices had been mostly absorbed by the government and not fully passed to the end user for last several months.
It is worth mentioning that inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service.
