Govt slashes sales tax on purchases from unregistered persons. DESIGN: FAIZAN DAWOOD
The decision was taken alongside other ‘relief’ measures after the country’s trade bodies threatened to launch a countrywide strike from September 30. The move came less than 20 days after the International Monetary Fund approved a $6.7 billion bailout package, the continuation of which hinges on fiscal consolidation and widening the tax base.
Sales tax on purchases from unregistered persons was reduced from 17% to just 1%. The government also reduced sales tax on fabrics from 5% to 3%, following pressure from the owner of a leading franchise.
In addition to these measures, the government also withdrew the condition of making retailers’ submit their addresses, computerised national identity card number and national tax number with their withholding statement. The government also excluded hundreds of items it had earlier incorporated in the Sales Tax Act 1990, exempting producers from paying 17% tax on the items.
The government also reduced the amount required to be withheld by wholesalers, dealers and distributors from 20% of the total sales tax to 10% of the total sales tax, and withdrew the restriction of maintaining a record of local supplies for the issuance of refunds.
“The government has taken these decisions to accommodate the demands of the business community despite the difficult financial situation,” said Finance Minister Ishaq Dar following a meeting with the country’s top ‘economic wizards’ on Sunday.
The measures signal a retreat on steps announced by the Pakistan Muslim League-Nawaz government just three months back and exposes ill-planning on part of the authorities.
Published in The Express Tribune, September 23rd, 2013.
COMMENTS (11)
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The poor & low paid is being constantly crushed. May Allah destroy the group of devils trying to snatch food & necessities of life from this class.
This is a good move and an appreciable retreat. Such tax is being born by the purchaser all the way although introduction of this law intended to penalize un-registered sellers but they had transferred impact on registered buyers. I don't agree with opinion that this law could help in tracking black economy because un-registered sellers trade without identity usually. Moreover, this reduction is for cases where the seller is not legally liable to get registered. So there was no justification of penalizing those, for not being registered, who were not legally required to get registered due to being a below taxable limits.