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CBR asked not to levy sales tax on computers

ISLAMABAD (May 29 2004): The government has directed the Central Board of Revenue (CBR) not to amend Sixth Schedule of the Sales Tax Act, 1990 for bringing computer hardware and software within the general sales tax (GST) net in the budget.

The CBR's proposal to impose 15 percent GST on the import of computer hardware/software was rejected by the policy markers owing to huge investment potential of information technology sector.

Official sources told Business Recorder here on Friday that the CBR was expecting to collect over Rs 1.5 billion by slapping GST on the import of computer hardware as well as software.

Secondly, it was one of the proposals of the International Monetary Fund (IMF) to impose sales tax on computer hardware and their peripheral units.

However, this revenue increasing measure has not been considered as practicable by the decision-makers because the stakeholders have started making hue and cry on the plan to impose GST on computer equipment, the officials said.

Under serial numbers 45 and 48 of the Sixth Schedule of the Sales Tax Act, 1990, the computer hardware, including laptops, notebooks, personal computers (PCs), mainframe and their peripheral units and parts and computer software were exempted from the sales tax.

The sources said that the CBR has made commitment with the international donors to take additional revenue measures for meeting revenue target of Rs 575 billion set for the new financial year.

In this context, the CBR made a proposal to exclude serial numbers 45 and 48 from the Sixth Schedule of the Sales Tax Act, 1990 to generate Rs 1.5 billion from the IT sector.

However, officials said that there is no possibility of bringing this sector within the GST net.

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