Govt considers expanding third schedule to boost sales tax collection

ISLAMABAD: The government is considering major taxation measures in the upcoming federal budget aimed at curbing sales tax evasion, increasing transparency and enhancing revenue collection.

According to sources, around 20 categories of commonly used consumer products are being considered for inclusion in the Third Schedule of the Sales Tax Act. The move is expected to generate an additional Rs60 billion in annual sales tax revenue.

Under the proposed changes, manufacturers will be required to clearly print product prices and the amount of sales tax collected on packaging. Officials believe the measure will help reduce under-invoicing and improve tax compliance.

The products under consideration include a wide range of dairy items such as canned milk, yogurt, cheese, milk cream and tea cream. Baby foods, cereals and nutritional supplements may also be brought under the Third Schedule, making it mandatory to display price and tax details on their packaging.

Sources said frozen food products, including frozen kebabs, nuggets and other processed food items, are also likely to be included in the proposed list.

Personal care products such as toothpaste, toothbrushes, shaving cream, shaving foam and shaving brushes may also be covered under the new regime. Pet food products are among other items being considered.

In addition, the government is reviewing proposals to include various household and electronic appliances in the Third Schedule. These may include LED televisions, refrigerators, washing machines, juicers, air conditioners, room coolers and electric fans.

Domestic gas appliances, including stoves, geysers, cooking ranges and other related products, are also being considered for inclusion.

According to sources, the objective of the proposal is to enhance transparency in pricing and tax collection, discourage tax evasion and strengthen government revenues. The final decision, however, will be taken after approval of the federal budget.