KARACHI: To
reduce inflation, give relief to the middle and lower income people and
stop tax evasion, the government has accepted the proposal of the
business community’s working group to bring down the sales tax rate to a
single digit.
On the direction of the finance minister, the Federal Board of Revenue (FBR) started work on reducing the rate of sales tax below 10 percent. The finance minister and his team welcomed the proposal coming from chambers and associations from across the country. Sources said Finance Minister Ishaq Dar had told traders and industrialists that the prime minister wanted to give relief to the middle and lower income groups.
A panel of chartered accountants and economic experts has put the proposal in front of the ministry after working many weeks. According to the proposal, reducing the sales tax rate to a single digit will benefit the people and reduce inflation.
The working group has also included the analysis of FBR data for the year 2012-13 showing that when the government had implemented sales tax at the rate of 17 percent, it could generate revenue only at the rate of 3.92 percent after making adjustments.
The reason for this loss is fake refunds and wrong inputs.The proposal has asked the government to set the sales tax rate at between 5 to 7 percent and abolish the system of input adjustments and refunds.
If the government keeps the rate of sales tax at 7 percent, it could generate revenue worth Rs1,400 to 1,500 billion. The sources said the ministry had accepted the proposal overall but corrupt elements in the FBR were opposing it.
On the direction of the finance minister, the Federal Board of Revenue (FBR) started work on reducing the rate of sales tax below 10 percent. The finance minister and his team welcomed the proposal coming from chambers and associations from across the country. Sources said Finance Minister Ishaq Dar had told traders and industrialists that the prime minister wanted to give relief to the middle and lower income groups.
A panel of chartered accountants and economic experts has put the proposal in front of the ministry after working many weeks. According to the proposal, reducing the sales tax rate to a single digit will benefit the people and reduce inflation.
The working group has also included the analysis of FBR data for the year 2012-13 showing that when the government had implemented sales tax at the rate of 17 percent, it could generate revenue only at the rate of 3.92 percent after making adjustments.
The reason for this loss is fake refunds and wrong inputs.The proposal has asked the government to set the sales tax rate at between 5 to 7 percent and abolish the system of input adjustments and refunds.
If the government keeps the rate of sales tax at 7 percent, it could generate revenue worth Rs1,400 to 1,500 billion. The sources said the ministry had accepted the proposal overall but corrupt elements in the FBR were opposing it.
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