The FBR has amended the negative list applicable to the sales tax refund regime for export-oriented sectors. Through STGO No. 24 of 2026, polyurethane falling under HS Code 3909 has been removed from the negative list contained in STGO No. 09 of 2023. The FBR’s stated reason is that polyurethane is an integral raw material used in leather goods.
Why does removal from the negative list matter? Under the refund mechanism, the negative list effectively restricts refund treatment for specified inputs. Once an item is removed, the particular restriction associated with its inclusion in that list no longer applies, although the taxpayer must still satisfy the other applicable conditions of the sales tax refund regime.
The development is particularly relevant for manufacturers in the leather sector using polyurethane as an input. More broadly, it also highlights an important practical point for exporters: refund eligibility does not depend only on whether input tax has been paid. The classification of an input and its status under applicable negative lists and refund-related orders can directly affect whether the corresponding input tax is processed through the refund mechanism.