The Federal Board of Revenue (FBR) has instructed lead battery manufacturers to deduct 80 percent of the applicable sales tax from all lead suppliers, an increase from the previous rate of 75 percent.

This change is part of a broader effort to curb the use of fake and flying invoices, as outlined in the recent amendments to the Eleventh Schedule of the Sales Tax Act (STA) through the Finance Act, 2024.

According to the FBR’s new sales tax circular, several key changes have been made to the withholding requirements for registered persons receiving supplies of specific goods. The updated regulations now mandate the following:

Cement Manufacturers: Required to withhold 80% of the applicable sales tax from suppliers of gypsum and limestone flux under Chapter 25 (PCT headings 2520.1010, 2520.1020, 2521.0000).

Coal Suppliers: Registered persons must withhold 80% of the applicable sales tax from suppliers of coal under Chapter 27 (PCT headings 2701.1100, 2701.1200, 2701.1900, 2701.2000, 2704.0010, 2704.0020, 2704.0090).

Other Goods: Registered persons receiving supplies of waste of paper and paperboard, plastic waste, crushed stone, and silica are also required to deduct sales tax.

The most notable change affects manufacturers of lead batteries, who must now deduct 80% of the applicable sales tax from any kind of lead supplier, an increase from the previous rate of 75%.

This adjustment aims to enhance compliance and reduce tax evasion through the use of fraudulent invoices.