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FBR to charge 17pc sales tax on restaurants, bakeries, caterers

21 Jan, 2022
These products shall be chargeable to tax @ 17 per cent under the VAT regime, according to the Finance (Supplementary) Act, 2022. File photo
These products shall be chargeable to tax @ 17 per cent under the VAT regime, according to the Finance (Supplementary) Act, 2022. File photo

The Federal Board of Revenue (FBR) will charge 17 percent sales tax on the food, food stuff, and sweetmeats supplied by restaurants, bakeries, caterers, and sweetmeat shops from January 16.

The FBR has issued a circular No 07 of 2022 (Sales Tax) on the explanation of important amendment introduced in the Sales Tax Act, 1990, through Finance (Supplementary) Act, 2022.

Up to January 15, the food, food stuff, and sweetmeat supplied by restaurants, bakeries, caterers, and sweetmeat shops was taxable @ 7.5 percent under serial No64 of Eighth Schedule of Sales Tax Act, 1990, with the condition that no input tax shall be adjusted.

Through the Finance (Supplementary) Act, 2022 serial No 64 of eight schedule of Sales Tax Act, 1990 has been omitted; now these products shall be chargeable to tax @ 17 percent under the VAT regime.

It is further explained that services mentioned under serial No1 of the Schedule to the ICT Service Ordinance, 2001 by hotels, motels, guest houses, marriage halls, and lawns (by whatever name called) including ‘pandal’ and ‘shamina’ services, clubs including race clubs, and caterers shall continue to be chargeable to tax @ 16 percent.

The taxpayers falling in the above category at para-1 are required to charge Sales tax @ 17 percent on supply with effect from January 16, 2022, the FBR added.

This report was first published in Business Recorder on Jan 21, 2022.