FBR announces 6 percent sales tax on ecommerce

ISLAMABAD: The Federal Board of Revenue (FBR) announced six percent sales tax on online sales of finished textile articles and leather goods provided the data is transmitted to its computerised system.

The FBR announced the amendment into the sales tax rules 2006 through a statutory regulatory order (180(1)/2019) on Monday.

The FBR has already started receiving live transactions of sales of finished articles of textile and leather.

The government earlier announced a reduced sales tax of six percent on finished textile articles and leather goods, effective from 1 July 2018, for those who are registered with the FBR’s computerised system. The system was made operational last year. As many as 75 individuals are now integrated with the system and declaring sales of their 2,574 outlets on it.

The FBR allowed textile and leather sectors to integrate with the FBR’s online system to avail the benefit of reduced rate of sales tax.

It will charge nine percent sales tax (instead of 6 percent) on supplies of textile units, which will not integrate with the FBR’s online system.

The FBR's system is ready for receiving live sales transaction as specified in the rule (150ZEB of Sales Tax Rules 2006). The eligible registered individuals can download software and integrate all their already declared outlets with the system. This is to be done by 3 March, 2019 in order to regularise the reduced rate already availed. “In case of failure differential amount shall be recoverable,” the FBR said in a statement.

The individuals volunteering to integrate their systems for availing reduced rate on future supplies and who fulfill conditions in rules can approach concerned commissioners for approval.

Websites hosted with a registered domain name have also been recognised to be treated as sales made through point of sale.