Govt likely to reduce tax exemptions in new sales tax bill

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ISLAMABAD: The government is likely to reduce tax exemptions in new proposed revised sales tax bill with certain fundamental changes related to enforcement and audit, Pakistan Today reliably learnt on Tuesday.
According to sources in the Law Ministry, the Federal Board of Revenue has sent the proposed bill to the Law Ministry a few days ago, proposing the withdrawal of all kinds of exemptions on sales tax, except on life saving drugs and food items.
The exemptions would help broaden the tax base to bring more money to the government for debt services. Another feature of the proposed sales tax bill is the withdrawal of zero rating facility on domestic supplies, the source said. Currently leather, surgical and textiles are exempted from sales tax.
The sources added that only exports would have zero rating facility in the new proposed bill. They said it had been proposed that serving prior notice would not be mandatory if anyone was found guilty of tax fraud. Moreover, multiple audit of the same period would be done away with, the sources said, adding that the bill was being scrutinised by the Law Ministry in consultations with FBR.
Asked if there was any change in the tax rate, the source said no change had been proposed and the rate would remain the same at 15 percent. They said the government was working to table the bill in the National Assembly by Nov 12 and seeking its passage during the current session of parliament. The sources said there were differences between the federal and the Sindh government over the issue of tax collection.
The Sindh government was asking the federal government that provinces should be responsible for the collection, while the Centre wanted to retain the right of collections. They said the government wanted to resolve the differences and prior to the approval of the bill by cabinet on Wednesday (today).