Govt. has introduced VAT. A comprehensive discussion is required to understand VAT. How it differ from Sales Tax. What are the implications of 2nd Sch of VAT. What will happen with Exemptions allowed under sales tax act. Intellectuals are invited to give their opinion to understand exactly with positive approach.
In my opinion, instead of introducing or replacing existing laws wirh new onw, FBR should first get ground realities and check leakages and corruption within the tax departments. Without addressing the ground realities no law can be fruitful. I am suggesting here a nominal change in the existing sales tax system which is quite implementable and hope most of the tax payer would prefer to accept it.
Sales tax deposited ( input tax ) is refunded fully to the zero rated industries on showing sales of manufactured goods. What is benefit to the FBR here. Only keeping the balance with it for a period of 45 to 60 days.
What happened on the other hand,
1- Most of tax payer get these funds from banks in the form of fund based facilities and pay mark up @ kibor + 2% to 3% etc.
2- Tax payer has to maintained various records, so technical highly paid staff is recruited to do all this.
3- REfund process is simple but even in the 100 % genuin cases, 1.5% to 2 % is normally paid to 'personalities" whose income source is black. Please keep in mind that this black source do nothing with the economy. Imagin how much money goes out of the business cycle.
In my opinion, if FBR take immediate action and allow tax payers to pay 2% of the Sales tax on self assessment system as final settlement on no deposit or refund basis.
to be continued.........