ISLAMABAD: The Federal Board of Revenue (FBR) restored all tax exemptions available to the people of Federally Administered Tribal Areas (Fata) and Provincially Administered Tribal Areas (Pata) with retrospective effect from June 1, 2018.

Two notifications were issued on Friday rescinding earlier notifications to implement the decision of the federal cabinet. Through the 25th Constitutional Amendment, the government has merged Fata and Pata in Khyber Pakhtunkhwa and Balochistan.

In order to restore the exemption level to tribal areas, the government has further amended the Second Schedule of the Income Tax Ordinance 2001.

As per amendments, any income which is not chargeable to tax prior to merger of any individual domiciled or company or association of persons resident in the tribal areas forming part of the provinces of KP and Balochistan from June 1, 2018 till June 30, 2023.

Similarly, no withholding taxes will be charged from the residents of tribal areas which were not applicable prior to commencement of the merger.

Through a sales tax notification, three earlier sales tax notifications were rescinded which according to business community of tribal areas has not restored the exemption level to the position prior to the merger.

According to the notification, all supplies will remain exempted from sales tax by whatever name called as levied under the Sales Tax Act 1990.

The exemption from sales tax will remain for the next five years with effect from June 1, 2018 till June 30, 2023.

However, the status of charging of sales tax on import stage is still not clear. FBR believe it is justified but tribal business community is opposing it.

Published in Dawn, October 6th, 2018