40,000 small traders exempted from sales tax audit

ISLAMABAD (July 01 2004): Giving immunity from audit to over 40,000 small and medium entrepreneurs, the Central Board of Revenue (CBR) has de-registered all retailers and manufacturers due to raise in the exemption threshold from July 1, 2004.

The CBR on Wednesday issued instructions to de-register all retailers and manufacturers previously enrolled due to low threshold.

The CBR has also announced new de-registration and audit procedure for collectors.

Official sources told Business Recorder that retailers and manufacturers who filed returns in the past, but are now below the exemption threshold limit, would be automatically de-registered without going through sales tax audit.

The persons who did not file sales tax returns in the past were given an opportunity to voluntarily submit return up to August 15, 2004. They would be exempted from audit and subsequently de-registered, whereas if they did not file return they would have gone through routine audit as prescribed under the law.

Tax officials hoped that the retailers and manufacturers would avail this opportunity and file return up to August 15 for de-registration.

Meanwhile, the CBR on Wednesday issued instructions to all collectors of sales tax that in the Budget 2004-05, the government has abolished the turnover tax/enrolment scheme and rationalised the exemption thresholds by raising the ceiling to Rs 5.0 million for both manufacturers and retailers.

Consequently, with the coming into effect of the Finance Act, 2004-05, on July 1, 2004, over 40,000 enrolled and registered manufacturers and retailers shall no longer be required to be registered and discharge their liabilities as postulated under the provisions of the Sales Tax Act, 1990. In order to save the Collectorates from investing resources in conducting exhaustive exercise of de-registration and to safeguard the tax payers from un-necessary hassles of de-registration requirements, it has been instructed that all the retailers and manufacturers who were previously enrolled shall stand de-registered with effect from July 1, 2004.

All the retailers and manufacturers whose annual turnover during the last twelve months was below Rs 5.0 million, but were registered under section 14 of the Sales Tax Act, 1990 at their own accord, shall also stand de-registered with effect from July 1, 2004. All such persons shall no longer be required to maintain record as prescribed under Chapter IV of the Act and file returns under Chapter V thereof.

The CBR has also directed all collectors that dedicated cell for de-registration shall be set up in each Collectorate for speedy disposal of cases. In this regard, the collectors should strictly follow new procedure of audit for de-registration.

Under the procedure, all such registered/enrolled retailers and manufacturers shall be immune from audit prescribed under rule 10 of Sales Tax Rules, 2004, for the transactions relating to the tax period prior to July, 2004, if they had filed their returns as provided under the relevant provisions of the Act and rules made there-under.

In case a registered/enrolled retailer or manufacturer did not file tax return for any tax period prior to July, 2004, there shall be no audit prior to de-registration, provided such retailer or manufacturer files tax return for that tax period by August 15, 2004.

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