No new tax imposed on drugs, clarifies FBR

Web Desk – August 03, 2021

ISLAMABAD: The Federal Board of Revenue (FBR) clarified on Tuesday that no new tax has been imposed on drugs.

The tax collecting body in a statement rejected a news report that prices of medicines have gone up significantly due to a withholding tax imposed on them.

It also dispelled the impression that scarcity of certain drugs was also due to the withholding tax being levied on medicines.

“No new tax has been imposed on medicines. Major supply chain below manufacturers and distributors is out of tax net. This chain consists of distributors, dealers, sub-dealers, wholesalers and retailers,” the FBR pointed out.

As a documentation measure, it said nominal withholding tax collection at the rates of 0.1% and 0.5% on sales to distributors and retailers respectively is required to be collected by sellers under the provisions of sections 236G and 236H of the Income Tax Ordinance, 2001.

“This is not a tax on medicines but on the income of traders involved in the supply chain. This tax is adjustable against the final tax liability,” the FBR stated.

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