The Sindh government in Pakistan has implemented a revised sales tax structure for the 2024-25 fiscal year, aiming to increase revenue generation. Here’s a breakdown of the key changes:

Sales Tax Increase:

• Effective July 1, 2024, the standard Sindh Sales Tax (SST) rate has risen from 13% to 15%.

Affected Businesses:

• This increase applies to various sectors, including restaurants, cafes, bakeries, wedding halls, hotels, guest houses, farmhouses, and cleaning services. Businesses in these sectors will need to collect and remit the new tax rate.

Incentive for Electronic Payments Withdrawn:

• To encourage digital transactions, the government offers a special benefit for customers using debit or credit cards.
• When paying with these cards, customers had enjoyed a reduced sales tax rate of 8%. This translates to a 7% discount on their bills compared to the standard 15% rate. However this was later withdrawn by SRB

Impact:

• Consumers might experience slightly higher prices due to the increased sales tax burden on businesses.
• However, the discount offered for electronic payments provides an incentive for customers to adopt cashless transactions. This can benefit both businesses (through faster settlements) and the government (through improved tax collection efficiency).

Who should care?

• Businesses operating in the aforementioned sectors in Sindh province, Pakistan.
• Consumers residing in Sindh who frequent these businesses.
• It’s advisable for businesses to update their pricing and invoicing systems to reflect the new tax rate.
• Consumers should be aware of the discount available for using debit or credit cards and consider taking advantage of it.