The Federal Board of Revenue (FBR) has made significant amendments to the Sales Tax General Order (STGO) Number 9 of 2023, resulting in the exclusion of several items from the negative list.
This change enables manufacturers in five major export sectors – textile, leather, carpets, surgical, and sports – to claim input tax adjustments on various industrial inputs.
Initially, the negative list in STGO 9 comprised 714 items for which input tax adjustment was not permissible for these sectors.
The FBR’s latest decision marks a shift in policy, aiming to support these vital export industries.
As per the updated guidelines, certain items under specific Pakistan Customs Tariff (PCT) headings will now be exempt from the constraints of STGO 9.
This exemption allows exporters in sectors such as leather and sports, including tents and canvas, to claim input tax adjustments on purchases of raw materials like tubes, pipes, and glass fibers, which are essential to their manufacturing processes.
Prior to this revision, the input tax adjustment was restricted for manufacturers in these sectors for goods deemed unrelated to their business activities, as outlined in the negative list attached to STGO 9.
The FBR has clarified its authority to modify the annexures or conditions as necessary, based on recommendations from field formations overseeing these export-oriented sectors.
This move is seen as a step towards facilitating the growth and competitiveness of these key export industries.
