FTO Wants FBR to Consider Sales Tax Exemption On These Items

Federal Tax Ombudsman (FTO) has strongly recommended the Federal Board of Revenue (FBR) to consider sales tax exemption on local sales of bun & rusk in the budget proposal for 2025.  According to an order of the FTO issued, failure of the department to issue a clarification despite several requests by the complainant on the taxability of basic items of necessity like bread, bun, rusk, naan, and roti is tantamount to maladministration under section 2(3) (ii) of FTC Ordinance.  It has asked FBR to direct the Member (Tax Policy) to respond to the clarification sought by the complainant on the taxability of basic items of necessity like bread, bun, rusk, naan, roti etc. and the correct method for reporting sales of these products in sales tax returns to ensure compliance with the relevant provisions of Law.  FBR should examine allowing the exemption from sales tax on local sales of bun & rusk in the budget proposal for 2025, the order said.  The complainant sought clarification on the intended tax treatment of different kinds of bread items particularly overlapping between Table-2 to the Sixth Schedule and entry 87 of Table-I to the Eight Schedule to the Act and the correct method for reporting sales of these products in sales tax returns to ensure compliance with the provisions of Law.  Moreover, as per the “Macro Poverty Outlook for Pakistan”, released by the World Bank, limited growth in real wages and employment will keep the poverty rate near 40 percent through the fiscal year 2026. At the same time, monetary poverty will remain high. It can be observed everywhere in cities; the daily wage workers/laborers start their day consuming bun or rusk and a cup of tea in the morning.   Therefore, FBR may consider the reversal of taxability of items like bun, rusks etc. which are forms of bread and consumed by the lower strata of the population for their survival, in the Budget Proposal for 2025.