The federal government and the Sindh government had signed a joint statement on Thursday in a major breakthrough to resolve a long-running sales tax dispute on toll manufacturing. The settlement, submitted by the Federal Board of Revenue (FBR) and the Sindh Revenue Board (SRB) in the Sindh High Court (SHC), paves the way to the settlement of all pending cases and references in the matter of the levy of sales tax on toll-based services.
The joint statement followed a number of meetings between the representatives of FBR and SRB according to the order of the Supreme Court dated June 6, 2024, and the SHC order dated May 27, 2025. These proceedings were related to Sindh Sales Tax on Services Act, 2011 and Sales Tax Act, 1990.
Key points of the settlement include:
- The Sindh Finance Act, 2013 made Toll manufacturing services liable to Sindh tax beginning July 1, 2013.
- The same was provided in federal law beginning July 1, 2015.
- No double taxation will be applied on the July 2015-June 2022 period; payments made to either of the bodies will be final after verification.
- The exemption of Toll services of Sindh tax came into effect on July 1, 2022.
- No forceful recovery will be undertaken before December 31, 2025.
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The SHC has decided this agreement by which all the cases have been disposed. This settlement is a commercial respite on industries involved in the production of the tobacco of tolls, which has ended years of indirect tax ambiguity.
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