Government Mandates HS Code on VAT Bills for Imports, Raises VAT Threshold for Service Trades

The government has mandated that traders must include the Harmonised System (HS) code when issuing VAT bills for imported goods. This change comes through an amendment to the Value Added Tax Regulation 1997.

According to the revised regulation, traders are now required to disclose the four-digit HS code as indicated on the short-declaration form for imported goods. The HS code, managed by the World Customs Organization, is a unique numerical classification used to identify internationally traded products. This new requirement aims to enhance the tracking of domestic trade of imported goods and curb cross-border smuggling.

In addition, the government has raised the VAT registration threshold for businesses involved in the service trade. Under the new provision, any service trade business with an annual transaction of Rs 3 million or more must register for VAT. Previously, the threshold was set at Rs 2 million. This updated rule also applies to businesses engaged in both goods and services.

The VAT requirements for transport and merchandise businesses remain unchanged. According to the existing law, these businesses must register for VAT if their annual transactions exceed Rs 5 million.