The Federal Board of Revenue (FBR) has announced a new mechanism for collecting sales tax on cement, directly linking the minimum taxable retail price to the average national retail prices reported in the Sensitive Price Index (SPI) by the Pakistan Bureau of Statistics (PBS). This change, notified through SRO 746(I)/2025, is set to take effect from May 1st.
Mechanism Linked to National SPI
Under the revised valuation method, the FBR will utilize the average national retail price of cement as published in PBS’s weekly SPI. This data, specifically the report immediately preceding the 1st and 16th of each month, will determine the minimum value upon which sales tax is calculated for the subsequent two-week periods.
The updated formula will be applied for the calculation of sales tax as stipulated under clause (a) of sub-section (2) of Section 3 of the Sales Tax Act, 1990.
Aim to Combat Under-Invoicing
FBR officials stated that the primary objective of this new system is to curb under-invoicing practices prevalent within the cement sector. By aligning the minimum taxable value with officially reported national retail prices, the FBR aims to ensure a more accurate and standardized approach to sales tax collection.
The FBR anticipates that using PBS data as a benchmark will not only streamline the collection process but also significantly reduce revenue leakage within the cement supply chain, leading to improved tax compliance and increased government revenue from the sector.
