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Reduced and uniform rate of GST proposed

ISLAMABAD (May 20 2004): Ministry of Industries and Production has proposed reduction and uniform rate of general sales tax (GST) and demanded its abolition on fertilisers, pesticides and agriculture machinery in the coming Budget 2004-05.

If GST cannot be abolished it may be reduced to 5 percent, the ministry recommended.

Various proposals were gathered from various stakeholders before submission to the Finance Ministry. The proposals also include rationalisation of sales tax on carpets, food and articles used in hotels, cranes and ship breaking industry.

The details of the proposals are as follows with the name of the organisation forwarding the suggestions.

a) General Sales Tax (GST) regime may be rationalised and uniform rate of GST may be introduced (Proposals: 8%, 10%, 12%, and 15%). It is proposed by RCCI/GCCI/SCCI/Delta Industries.

b) GST @ 15% on accommodation, food, beverages and other services to be rationalised. This is forwarded by Hotels Owners Association.

c) GST is also levied on an arbitrarily computed bed tax, which has an effect of tax on tax. It is suggested by Hotels Owners Association.

d) Input sales tax adjustment facility may be extended to Hotel Owning Companies. Proposed by Hotels Owners Association.

e) Exemption of duties on imports by the Hotel Industry on items not manufactured locally or those not of the same quality as required for construction of 4/5 star hotels. It was submitted by Hotels Owners Association.

f) Customs Duty on equipment for ship breaking industry may be reduced from 5% to 0 %. It was sent by LIEDA/WCCI.

g) Local cement industry is subject to 15% sales tax whereas fiscal levies are lower on imported cement. Require similar treatment as available to imported cement. It was indicated by APCMA.

h) The present one-year period for carrying forward GST is very long and its is badly affecting liquidity of the companies. The carry forward period for GST needs to be reduced to six months from the existing of one year. Ref: Section 10 of the Sales Tax Act 1990. It was submitted by Denim Sector.

i) Sales tax regime for sugar industry may be revised.

i. All Benami sugar sale be banned.

ii. The sales tax on sugar be reduced from 15% to 5% being a food item. It was proposed by APSMA.

j) The cranes on floating vessels are exempt from sales tax whereas cranes for ports are subject to sales tax thus creating an anomaly. In order to provide a level playing field, ports and shipping equipment/machinery may be exempted from GST as these can not be used anywhere else. It was requested by Ports and Shipping Sector.

k) GST refund on export of carpets may be reviewed to give support to carpet industry. SCCI sent this proposal.

l) Sales Tax on packing materials for locally manufactured finished drugs to be done away with the make them at per with the imported ones. Presently, no Sales Tax is imposed on packing materials imported as finished drugs.

m) Sales Tax may be abolished on Fertilisers, Pesticides, Agriculture Machinery, Electricity and Diesel. If GST cannot be abolished, may be reduced to 5%. It was proposed by Kissan Board Pakistan.

n) GST and all other taxes should be deducted at source as in case of Fertilisers and cold drinks. It was also suggested by Kissan Board Pakistan.

o) Tax holiday should be given to modern agriculture machinery manufacturers. Kissan Board Pakistan sent it too.

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