Karachi, August 28, 2024 – The Karachi Tax Bar Association (KTBA) has brought attention to the tax challenges faced by Pakistan’s pharmaceutical sector following recent changes in sales tax regulations. In a recent correspondence with Hameed Ateeq Sarwar, Member (Inland Revenue – Policy) of the Federal Board of Revenue (FBR), KTBA President Syed Zafar Ahmed highlighted the issues arising from the amendments to the Sales Tax Rules, 2006. The concern revolves around a new provision introduced under Rule 18A of the Sales Tax Rules, 2006, via SRO 1130 of 2024, dated August 1, 2024. This provision specifies that the second proviso to sub-rule (3) of Rule 18, which was initially inserted through SRO 350 of 2024 dated March 7, 2024, will not apply to invoices issued by certain registered entities from March 7, 2024. These entities include gas transmission and distribution companies, electricity distribution companies, independent power producers or WAPDA, manufacturers, distributors, wholesalers, or retailers of Third Schedule items, petroleum exploration and production companies, and other registered buyers. Under the current sales tax regime, as outlined in Serial No. 81 and 82 of the Eighth Schedule of the Sales Tax Act, 1990, the pharmaceutical sector is subjected to a fixed 1% sales tax rate without the right to claim any input tax. This rule has created a unique situation for the sector, as explained by the KTBA. Syed Zafar Ahmed, President of…