ISLAMABAD: The government of Pakistan has taken step to restore the sales tax structure on drugs and pharmaceuticals, effective July 1st, 2022. This decision aims to rectify the anomalies that emerged as a result of the amendment made last year.
Over the past few years, the government has been actively making amendments to regulate and rationalize the sales tax rates on drugs and medicine. However, some of these changes inadvertently led to discrepancies in the system. Therefore, in an effort to address this issue, the government has reinstated the sales tax structure on drugs and pharmaceuticals.
Under the Finance Act, 2022, dated June 30, 2022, the government omitted serial number 19 from the 5th Schedule of the Sales Tax Act. Additionally, a new entry at serial numbers 81 and 82 was inserted in the Eighth Schedule of the Sales Tax Act, subjecting drugs registered under the Drugs Act, 1976 to a sales tax rate of 01 percent.
Consequently, drugs falling under Chapter 30 of the first schedule but not registered under the Drugs Act, 1976 became liable for sales tax at the standard rate due to this amendment.
In the recent budget, the government proposed the substitution of entry numbers 81 and 82 of the Eighth Schedule to restore the tax structure on drugs and medicine. This proposal aims to rectify the disparity and anomalies that have arisen. The restoration of the previous sales tax structure will be applied retrospectively from July 1st, 2022.
This decision by the government is expected to provide clarity and stability to the pharmaceutical industry, ensuring a fair and consistent tax system for all stakeholders involved. It demonstrates the government's commitment to fostering a favorable environment for the pharmaceutical sector, which plays a vital role in public health and the nation's overall well-being.
The government remains dedicated to implementing policies that promote a robust and thriving pharmaceutical industry, while also safeguarding the interests of the public.
