The Federal Board of Revenue (FBR) of Pakistan has send out a clarification on Saturday to the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) and the Chief Commissioners of the LTUs and RTOs on the rate of sales tax on textile and leather finished products. FBR has put across to follow the new FBR clarification on sales tax in the field formations.

The clarification states that the taxable supplies of finished articles made of leather, artificial leather and textiles and textile made-ups are chargeable to reduced rate of 5 percent sales tax. Local supplies of these goods to un-registered persons including government departments having Free Tax Numbers (FTNs) are also liable to one percent extra/further tax.

According to the FBR''s instructions to the field formations, the taxable supplies of finished articles of leather, artificial leather and textiles and textile made-ups falling under Table-II of SRO 1125(I)/2011 dated 31.12.2011 (as amended by SRO 628 (I)/2013 dated 26.7.2013) are chargeable to sales tax @ 5 percent, wef, 26th July, 2013. Supplies of the said goods to unregistered persons (including government departments holding FTN) are also subject to further tax @1 percent under section 3(1A) of the Sales Tax Act, 1990.