Overview
- The Federal Board of Revenue issued Sales Tax General Order No. 9, which was published Tuesday, cutting the minimum value‑addition sales tax on imported coal for qualifying independent power producers from 3% to 1%.
- The 1% rate applies only when coal is imported exclusively for direct supply to coal‑fired IPPs that hold a generation licence from the National Electric Power Regulatory Authority.
- To qualify, importers must be registered under the Sales Tax Act, 1990 and must submit purchase orders, supply agreements or equivalent documentary proof to the Collector of Customs at the time of import.
- Customs may allow clearance on the basis of those documents but the FBR will carry out post‑clearance audits and importers found in breach must pay the differential tax plus default surcharges and penalties under the Sales Tax Act.
- The order covers coal classified under Chapter 27 of the customs tariff and aims to lower generation costs for coal plants, a change that could ease financial pressure on power and related industries while raising the need for tighter recordkeeping and verification.