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Sales tax collectors asked to ensure correct payment

ISLAMABAD (August 06 2004): The Central Board of Revenue (CBR) has directed all the collectors of sales tax to monitor sectors where rate of general sales tax (GST) has been brought down from 20 percent to 15 percent in the Budget 2004-05.

In the budget, SRO 389 (I)/2001 was rescinded through another SRO 489 (I)/2004 of June 12, 2004 to reduce GST rate on raw materials liable to this higher rate of sales tax.

Sources told Business Recorder here on Thursday that the decision was taken in the last collectors' of sales tax conference to specially monitor those sectors where rate of sales tax has been curtailed from 20 percent to 15 percent.

They said that the purpose of monitoring these sectors is to ensure that they are paying sales tax on correct value addition or not.

The CBR has issued instructions to all the collectors of sales tax for the monitoring of these sectors.

About 228 items/raw materials were subjected to higher levy of sales tax at the rate of 20 percent, which not only increased up front cost of industries, already facing serious challenges from cheaper competing imports, but also gave rise to refunds in certain essential industries. The CBR abolished the higher tax rate 20 percent to provide relief to the consumers.

The single rate of sales tax at 15 percent would substantially reduce the cash flow problems for the industries.

The sales tax regime was unnecessarily made complicated through the introduction of multiple tax rates. With a view to giving a significant boost to investment and to reduce consumer prices, the rate of sales tax was reduced.

This measure is a credible measure, which will have a salutary effect on efficiency of our industry as it would significantly reduce the cost of doing business, release the stuck up cash, remove the need to claim refunds and, above all, save the hassle of dealing with the tax officials.

The sources said that the CBR has given a number of tax concessions to various industries in the budget and introduced uniform GST rate of 15 percent.

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