FBR Increases Additional Sales Tax on Unregistered Persons to 4% in Finance Bill 2023

The Federal Board of Revenue (FBR) has increased the 3 percent sales tax (further tax) on unregistered persons to 4 percent via the latest amendments in the Finance Bill 2023. The rate of further tax has been increased by one percent under the amended Finance Bill 2023 to discourage supplies to unregistered retailers and distributors. If someone intends to avoid the sales tax net, they would have to pay a 4 percent additional tax. This is an effort to encourage documentation and prevent individuals from supplying to unregistered retailers. Meanwhile, the need for Tier-1 retailers to have shop areas has been removed from the Finance Bill 2023. Also, DAP fertilizers would be subject to a 5 percent sales tax under the modified tax targets for the fiscal year 2023-24. This is subject to the stipulation that no reimbursement of excess input tax will be permitted under the amended Finance Bill 2023.