Reformed GST rules take shape
Full input tax refunds to be allowed, exemptions to be revoked.
ISLAMABAD:
The federal government has decided to either introduce a separate bill for sales tax on services or insert a separate chapter for the purpose in the current bill for reformed general sales tax (RGST) on goods.
It has also been decided to allow full refunds on input tax adjustment claims by registered taxpayers. Previously, 90 per cent of input tax adjustment claims could be refunded.
Registered manufacturers, importers and wholesalers will also have to provide the national tax numbers and CNIC numbers of the buyers.
According to documents, exemption from RGST provided to goods will be minimised and an integrated general sales tax will be imposed on all goods and services as per an agreement between the provinces and the federation.
Special schemes and procedures will be eliminated while local sales of zero-rated sectors will also be subject to taxation.
However, the document conceded that the imposition of RGST on exempted items will bring a one-time increase in prices of those items but a proposed cut in GST rate across the board and consolidation of multiple and higher GST rates into a single one will instead counter the inflationary pressures. Also, the fall in fiscal deficit will also reduce inflationary pressures.
It added that the registration threshold for small businesses will be increased from Rs5 million to Rs7.5 million.
A speedy and modern sales tax refund system will also be introduced to minimise complaints, according to the document.
Published in The Express Tribune, November 7th, 2010.
The federal government has decided to either introduce a separate bill for sales tax on services or insert a separate chapter for the purpose in the current bill for reformed general sales tax (RGST) on goods.
It has also been decided to allow full refunds on input tax adjustment claims by registered taxpayers. Previously, 90 per cent of input tax adjustment claims could be refunded.
Registered manufacturers, importers and wholesalers will also have to provide the national tax numbers and CNIC numbers of the buyers.
According to documents, exemption from RGST provided to goods will be minimised and an integrated general sales tax will be imposed on all goods and services as per an agreement between the provinces and the federation.
Special schemes and procedures will be eliminated while local sales of zero-rated sectors will also be subject to taxation.
However, the document conceded that the imposition of RGST on exempted items will bring a one-time increase in prices of those items but a proposed cut in GST rate across the board and consolidation of multiple and higher GST rates into a single one will instead counter the inflationary pressures. Also, the fall in fiscal deficit will also reduce inflationary pressures.
It added that the registration threshold for small businesses will be increased from Rs5 million to Rs7.5 million.
A speedy and modern sales tax refund system will also be introduced to minimise complaints, according to the document.
Published in The Express Tribune, November 7th, 2010.