FBR withdraws 17pc sales tax on bran

The federal government has decided to withdraw the proposed 17 per cent sales tax on wheat bran while undoing the decision to abolish one per cent rebate on annual sales of flour mills after flour mills started their protest against the proposed increase in taxes.

According to details, the Federal Board of Revenue (FBR) issued a written clarification stating that no change is being made in the existing tax regime.

The statement, which was issued late night on Wednesday, clarified that the minimum tax applicable on flour Mills would remain at 0.25pc of the turnover instead of 1.25pc as being generally interpreted.

“The words ‘flour mills’ could not be mentioned inadvertently in the table which was an error and had been noted and would be rectified in the amended bill. This would mean that the minimum tax applicable on flour mills would remain at 0.25pc of the turnover instead of 1.25pc as being generally interpreted,” it said.

It further stated that in order to boost the government’s drive to keep inflation under control and to give maximum relief to the business community, General Sales Tax (GST) on wheat bran proposed to be enhanced to 17pc in the Finance Bill 2021 is also being taken back.

Earlier, the Pakistan Flour Mills Association (PFMA) announced plans to go on a two-day strike from June 24 as a protest against budget measures proposing a hike in income tax on turnover of flour mills and increase the sales tax on bran.

At present, flour mills produce about 19kg of bran out of 100kg of wheat, with a current market price of Rs1,400 per 34kg bag. Due to separate sales of bran, the price of flour is kept low for the consumers.

In particular, the food department takes into account the price of bran while determining the official price of flour in consultation with flour mills. An increase in the sales tax on bran to 17% is expected to increase the 20kg bag of flour by Rs60 to Rs67.