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Two amnesty schemes likely in budget

ISLAMABAD (June 04 2005): The Central Board of Revenue (CBR) will announce an amnesty scheme for the business community in the 2005-06 budget, exempting it from additional sales tax and penalty, provided the registered taxpayers are willing to deposit the principal amount of sales tax.

Sources told Business Recorder on Friday that the Economic Co-ordination Committee (ECC) of the Cabinet has given approval to two new schemes.

First, 100 percent waiver of penal surcharge on imported goods overstayed in the bonded warehouses. Secondly, launching of a new amnesty scheme to recover sales tax arrears of Rs 750 million to Rs 1250 million. Both schemes would be made part of the Finance Bill 2005-06 to reduce litigations between the taxpayers and department.

Sources said that the new scheme has been drafted in line with previous procedure to recover maximum arrears from the defaulters. According to CBR estimates, both schemes would generate up to Rs 1250 million in the next fiscal year. The taxpayers could be freed from unnecessary litigation and past liabilities by availing the relief. The notifications would give tax relief to the taxpayers without forcing them to approach the collector of sales tax or the Board.

It is expected that the tax relief package for persons who want to avail exemption from additional sales tax/penalty covers those who did not pay sales tax for some reason, took inadmissible refund or adjustment of input tax, against whom any amount of sales tax is outstanding under audit objection, audit report, demand notice, assessment/adjudication orders. The concession may be available even if a case is pending in adjudication, appeal or at any other forum and would not affect the person's right of appeal after depositing liabilities under the notification.

The concessional package may also be availed by persons who wrongly claimed refund on the basis of fake or flying invoices.

The second scheme has been drafted to remit penal surcharge calculated at the rate of 1 percent of customs duty on imported goods, which overstayed in the bonded warehouses, in case the goods are cleared by June 30, 2005.

Sources said that CBR had received representations from taxpayers, associations and trade bodies that there were many cases where taxpayers could not pay sales tax due to some inadvertent mistake, unawareness of amendments in the law, financial constraints or other circumstances. In such cases, they should not be burdened with additional tax and penalty.

A large number of such cases have piled in adjudication or litigation at various stages. Such volume of litigation and consequent holding up of revenue is beneficial neither for the taxpayers nor for the department.

Taxpayers expressed their willingness to deposit the principal amount of sales tax if they are provided relief in the form of waiver of additional tax and penalty.

Keeping in view the hardships faced by the taxpayers, the CBR will issue notifications aimed at granting relief, reducing litigation, freeing up revenue and encouraging registration.

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