VAT-exempted goods, services set to total 1500 from 1200

Essential goods and services under VAT exemption list are likely to be increased to 1,500 in the 2017-18 national budget from existing 1,200.
Mild steel rod, edible oil, sugar, purchase of land and apartments might be exempted from payment of Value Added Tax (VAT) from July 01, 2017.
Declaration on VAT exemption may come in the budget to be placed in parliament on June 01 next.
However, the tax authority is set to continue the VAT on English medium schools while all other educational institutions would be exempted from payment of VAT.
Mostly essential goods, some 20 types of life-saving drugs, all types of medical services, agriculture sector and training activities are likely to be exempted from payment of VAT.
Sources said prices of MS rod might increase substantially after implementation of the new VAT law as the product is currently enjoying tariff value.
Earlier, the National Board of Revenue (NBR) said the MS rod is the only product that might be affected due to implementation of the new law.
Officials said the list of VAT-exempted products has been widened with amendment of the new VAT and Supplementary Act-2012 as the law is set to introduce a uniform rate on all products and services.
They said the rate of VAT might be cut by 2.0 to 3.0 per cent to 12 per cent from 15 per cent in the new law.
Currently, there is 1.5 per cent VAT on total sales value on purchase of all types of residential and commercial apartments below 750 square feet.
Also, there is 2.5 per cent VAT on transfer price of land.
Kidney dialysis solution, equipment for heart operations and blood bags will be exempted from payment of VAT.
Currently, only unprocessed agriculture products are VAT-free.
But, the new law will exempt from VAT all types of agricultural products like rice, wheat, atta, vegetable, spices, fruits, milk, salt, fish, meat, domestic animal, processed agricultural products, both packaged or unpackaged unless those are cooked.
Transportation of agricultural goods is likely to be VAT-free.
Public transport fare including taxicab service, except inter-city air-conditioned services, would be exempted from VAT.
IT sector and export-oriented industries will enjoy VAT waiver on rent for office space and factory.
Currently, only factory rent is VAT-exempted.
All types of procurement for development projects under public-private partnership scheme, foreign assistance and fast-track projects will be exempted from VAT.
Local information technology (IT) sector will not need to pay VAT on supply of information technology-enabled services to government and other entities authorised for VAT deduction at source which is currently subject to 4.5 per cent VAT.
For protection of domestic industry, the SD will remain unchanged on the existing products and services.
Currently, importers have to pay supplementary duty on import of 1,420 products.
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